Of Presidents and the South African Rand

Posted by on Jun 5, 2013 in ArbMaker News! | No Comments

The collapsing Rand has been paramount in the minds of South Africans during the last two weeks. The Rand, according to the editorial of local weekly the ‘Sunday Times’ last Sunday, is the Nation’s share price, a market indicator of the net worth of South Africa, Incorporated.

Well, SA Inc. is looking wobbly as the Rand went into a swoon in the second half of May and touched a four year low of R10.20 to one US Dollar on Thursday, 30 May.

In perhaps a classic case of coincidental correlation, the Rand hit the four year low during the trading day following a press briefing on the economy by President Jacob Zuma. If the objective of the briefing was to ‘calm the markets’, the path of the Rand the trading day following the briefing told a very different story.

Did President Zuma cause the record low of the Rand? Certainly, argued many: did the four-year nadir not occur after his press briefing that was supposed to calm the markets?

The Rand is traditionally said to be a volatile emerging market currency. Here is a take on the last two Presidents and the value of the Rand using statistical parameters of the mean; and those of variance to gauge volatility. The question is: has the “share price” of SA, Inc. been more volatile during President Zuma’s time at the helm than during that of his predecessor?

The following table presents values of the average and variability in the value of the USDZAR during President Zuma’s time, and also during the time of President Mbeki, his predecessor. The chart below the table shows values of the average and the standard deviation during the two periods.


Table: Rand/US$ Averages and Variability During Recent Presidential Terms


JG Zuma*

TM Mbeki




Standard Deviation



Coefficient of Variation






Presidential Period

10 May 2009 – 31 May 2013*

14 Jun 1999 – 24 Sep 2008

(Data Source: http://research.stlouisfed.org/fred2/series/DEXSFUS/  (Download 4 Jun 2013)


*Current President of RSA

While President Zuma’s speech did not calm the markets, he has presided over a relatively less volatile Rand/US$ period than his predecessor. The variance, standard deviation and coefficient of variation are all lower since he has been in charge of SA, Inc.

There are, of course, a myriad of factors at play. But the statistics do not tell a lie. Or do they – context (and another 5 years of data) might make a lot of difference to trading judgements formed today.

Leave a Reply