The rand lost 98% of its value since 1994

An analysis of the rand’s value measured against the gold price showed that the South African currency has lost 97.9% of its value since 1994.

Put differently, if you kept a R1 coin over the past thirty years, today it would only be able to buy what 2 cents bought you in 1994.

To calculate a currency’s absolute value change, you have to measure its change in purchasing power over time. A measure of a currency’s ability to buy goods gives a good indication of a currency’s decrease in absolute value.

In South Africa, most currency strength measures compare the South African rand (ZAR) with the United States dollar (USD).

However, this measure does not account for the weakening of the US dollar over the evaluation period.

Measuring one currency’s change to another currency only explains the currency’s relative change in value.

Therefore, a broad basket of goods should deliver a more accurate general change in a currency’s absolute value as long as all goods remain standardised.

Daily Investor considered different measures of absolute value change for the rand and settled on the price of gold.

Although gold’s price fluctuates over time, its supply remains constant and it is completely standardised.

The price of gold is heavily influenced by investor sentiment, inflation, and other factors. However, it is widely viewed as a measure of money.

Under the gold standard, a country’s currency was directly convertible to a fixed amount of gold, with the currency’s value determined by this fixed price.

Although gold is not a perfect measure, it is suitable due to its global recognition and ease of comparison across different currencies.

One troy ounce (31 grams) of gold today is precisely the same as one troy ounce of gold at any other time in history.

Inflation is essentially a product of central banks continuing to print money, which naturally devalues a currency over time.

Gold’s price increase can certainly, to a large extent, be explained by the worldwide inflationary pressures over time.

The South African rand since 1994

Daily Investor tracked the South African rand’s value relative to gold since 1994 to see how its absolute value has decreased.

In 1994, the spot price of one ounce of gold was R1,308. Today, it is R61,199. This means that R1,308 would buy you 31 grams of gold in 1994. Today, it would buy you only 0.66 grams of gold.

This means that, in absolute terms, as measured against the price of gold, the value of the South African rand fell by 97.9%.

To put this decline in perspective, the US dollar has lost 89% of its value since 1994 when measured against gold.

This comparison revealed that the South African rand has lost much more of its value over the last three decades than the US Dollar.

The chart below shows the decline in the value of the South African rand between 1994 and 2025.