Resumo

ROSSOUW, Jannie. Diamond jubilee of decimalisation: 60 years of South African rand and cent. Tydskr. geesteswet. [online]. 2020, vol.60, n.3, pp.658-673. ISSN 2224-7912.  http://dx.doi.org/10.17159/2224-7912/2020/v60n3a6.

The Union of South Africa, the precursor to the Republic of South Africa, introduced a decimal coinage system, comprising rand and cents, on 14 February 1961. The rand and cents replaced the imperial system of pounds, shillings and pennies (£/s/d). The decimalisation of 1961 is often associated with the establishment of the Republic of South Africa on 31 May 1961, but these were indeed two different processes that happened in the same year. Botswana (then the Bechuanaland Protectorate), Eswatini (then the Protectorate of Swaziland), Lesotho (then the Basutaland Protectorate) and Namibia (then South West Africa) also introduced a de facto decimal coinage system on 14 February 1961, since the South African currency served as legal tender in those countries at the time. The decision to introduce a decimal coinage system was taken as far back as 1956, while the decision to consider full independence of South Africa from the United Kingdom as the Republic of South Africa only came about in 1960. South Africa had its own currency, the South African pound, modelled on the system of £/s/d as used in the UK, as of 1910. Decimalisation was therefore not so much the announcement of an independent currency, but rather the replacement of one independent currency system with another. South Africa adopted a system of rand and cents, with an official conversion rate of R2,00 = £1/-/-. The conversion followed the report of the Decimal Coinage Commission appointed on 8 August 1956. The Commission was appointed to investigate (i) a decimal coinage system regarded as the most appropriate for the Union of South Africa; (ii) the conversion methodology considered most appropriate; and (iii) the cost of decimalisation. On 1 August 1958, the Commission published a report recommending a specific decimal system for South Africa. The South African government accepted the recommendation in the Commission's majority report that the country should establish a decimal monetary system on the basis of a 10 shillings/cent system. This system and conversion rate were recommended partly because it was found that the value of the vast majority of cash transactions at the time of the investigation was less than £1. The value of the pound as a base unit would therefore have been too large. The currency's name, rand, is derived from the Witwatersrand, the gold deposit where Johannesburg and the first gold mines were located. Decimalisation in South Africa preceded decimalisation in the United Kingdom by exactly a decade. The United Kingdom decimalised on 15 February 1971. Decimalisation also preceded metrication in South Africa by about a decade, with the latter commencing on 1 April 1971. At the time of decimalisation, the value of R2,00 was set to £1/-/-. Since then, the exchange rate of the rand has weakened and currently stands at around R21,00 = £1,00. This research uses a model to test a hypothesis for this weakening of the exchange rate based on economic growth, inflation and interest rate differentials as well as a political discount/premium between South Africa and the United Kingdom. The model analyses economic growth and the inflation rates in the United Kingdom and South Africa over the relevant period. The impact of interest rate differentials on the exchange rate is calculated as a forward exchange contract over the period of comparison. Any difference that is not explained by these aspects is considered a political discount/premium. On this basis, the model is therefore specified as: where pd = political discount, calculated by solving the model; £/R2020 = exchange rate in 2020, namely £1 = R21. tk = forward exchange rate. £/R1961 = exchange rate in 1961, namely £1 = R2. ∆n = difference in inflation between the United Kingdom and South Africa; and ∆y = difference in economic growth between the United Kingdom and South Africa. Based on this model, the rand trades at a very large political discount of about 45 per cent against the pound. Due to political uncertainty in South Africa, it is impossible to predict the value of the rand against the pound over the next 60 years. However, if the trend of the last 60 years is repeated, the exchange rate will be around £1 = R180,00 in 2081.

Palavras-chave : cent; decimalisation; metrication; political discount; Republic of South Africa; rand.

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