JOHANNESBURG – The local currency has hit significant highs against the US dollar. A stronger rand exchange rate makes imports more affordable and tames inflation, including fuel price rises. By the end of last week, the rand edged closer to the R14 to-the-dollar mark.

However, three crucial factors are as follows:

1. Interest rates. High interest rates help promote a strong currency, because foreign investors can get a higher return by investing in that country.
2. Economic policies. Tight fiscal discipline and anti-inflationary monetary policies help promote a strong currency.
3. Stability.

Convert US Dollar to South African Rand

If the value appreciates (or goes up), demand for the currency also rises. In contrast, if a currency depreciates, it loses value against the currency against which it is being traded.

A key factor driving rand strength is commodity prices, which are boosting South Africa’s terms of trade. ‘As long as the long end of our bond curve is relatively attractive, that will attract capital inflows, which could further strengthen the rand,’ King said.

Since South Africa relies more on mineral exports, low commodity prices have also led to a weakening of the Rand. Due to low economic growth, China’s demand for commodities have gone down resulting in lower global commodity prices. Investor confidence is yet another factor affecting the value of currency.

Devaluation is likely to cause inflation because: Imports will be more expensive (any imported good or raw material will increase in price) Aggregate Demand (AD) increases – causing demand-pull inflation.

Downward pressure on the value of a currency almost invariably leads to high interest rates and lower bond values. So as the rand depreciated, the margins spread and there was higher volatility. Those very factors gave rise to pressure on the interest derivatives and bond markets, which led to losses.

The latest update to The Economists’ Big Mac Index for the start of 2021 shows that the rand is still one of the most undervalued currencies globally. The index has however, become a global standard, included in several economic textbooks while also becoming the subject of at least 20 academic studies, the group noted.

The controversial land reform programme that was initiated in Zimbabwe, followed by the September 11, 2001 attacks, propelled it to its weakest historical level of R 13.84 to the dollar in December 2001.

Russian ruble

Iranian Rial

So now, let’s see what 1 U.S. Dollar (=20,000 Tomans) can buy us in Iran. You can buy 5 cans of Coca Cola, a moderate hamburger, a lettuce salad at an expensive restaurant, a cup of coffee at an expensive café, or simply, you can buy a pack of Winston Blue cigarettes.

Top 10: Strongest Currencies in the World 2020

• #1 Kuwaiti Dinar [1 KWD = 3.27 USD]
• #2 Bahraini Dinar [1 BHD = 2.65 USD]
• #3 Omani Rial [1 OMR = 2.60 USD]
• #4 Jordanian Dinar [1 JOD = 1.41 USD]
• #5 Pound Sterling [1 GBP = 1.30 USD]
• #6 Cayman Islands Dollar [1 KYD = 1.20 USD]
• #7 Euro [1 EUR = 1.18 USD]

Kuwaiti Dinar

The dollar’s strength is the reason governments are willing to hold the dollar in their foreign exchange reserves. Governments acquire currencies from their international transactions. They also receive them from domestic businesses and travelers who redeem them for local currencies.

yuan

The headlines have a lot to say about the dollar’s downward movement in recent months, as it has certainly dropped in value from March 2020 to present. But while the dollar is down from its recent peak, it is still above the levels we saw through most of 2019 (which, remember, was a good year).

You can easily trade bitcoin for cash or assets like gold instantly with incredibly low fees. The high liquidity associated with bitcoin makes it a great investment vessel if you’re looking for short-term profit. Digital currencies may also be a long-term investment due to their high market demand.

The collapse of the dollar remains highly unlikely. Of the preconditions necessary to force a collapse, only the prospect of higher inflation appears reasonable. Foreign exporters such as China and Japan do not want a dollar collapse because the United States is too important a customer.

YES: Although having recently forecast the economy to slow but not fall into recession in 2020, the coronavirus malaise has already caused the economy to falter. It’s not inevitable, but increasingly likely that the U.S. will reach the technical definition of a recession (two successive quarters of negative GDP).

European Euro rate: 1 EUR = 1.21 USD (European Euro to US Dollar). Holding the second place as the reserve world currency (with the US dollar taking the first place), Euro is one of the world’s safest currencies.

Will the U.S Economy Collapse? A U.S. economy collapse is unlikely. When necessary, the government can act quickly to avoid a total collapse.

Relief checks drove consumer spending on goods in the first quarter. Over all, the broadest measure of the economy — gross domestic product — grew by 1.6 percent in the first three months of 2021, compared with 1.1 percent in the final quarter of last year. …

When the stock market goes down, volatility generally goes up, which could be a profitable bet for those willing to take risks. Though you can’t invest in VIX directly, products have been developed to make it possible for you to profit from increased market volatility. One of the first was the VXX exchange-traded note.

The Best Safe Investments For Your Money

• High-Yield Savings Accounts. High-yield savings accounts are just about the safest type of account for your money.
• Certificates of Deposit.
• Gold.
• U.S. Treasury Bonds.
• Series I Savings Bonds.
• Corporate Bonds.
• Real Estate.
• Preferred Stocks.

Surrendering to the fear and panic that a market crash may elicit can cost you more than the market decline itself. Withdrawing money from a 401(k) before age 59½ can result in a 10% penalty on top of normal income taxes.

Investors who experience a crash can lose money if they sell their positions, instead of waiting it out for a rise. Those who have purchased stock on margin may be forced to liquidate at a loss due to margin calls.