The rand is among the most traded emerging-market currencies, so it often moves on global news before local news. When investors grow nervous about the world economy, they tend to sell riskier assets such as South African bonds and the rand with them; when appetite for risk returns, the rand usually recovers.
At home, the Reserve Bank's interest rate decisions change how much investors earn on rand assets. Commodity exports, led by gold and platinum group metals, bring in more dollars when prices are high. The government's finances, set out in the Budget in February and the Medium-Term Budget Policy Statement in October, affect how much investors will lend to South Africa and at what rate.
A weaker rand raises the price of imported goods, above all fuel, which is priced in dollars. A firmer rand helps to slow inflation, but exporters and tourism businesses earn fewer rand for each dollar.
