How to go about foreign exchange rates in South Africa when converting rand to other currencies with Sikhona’s trusted services
Have you ever wondered about what the South African Rand exchange rate is and what it really means for the economy? Below we discuss this topic and how important the exchange rate is to us at Sikhona Money Transfers when people send and receive money. Find out more below.
Sikhona Money Transfers is an organization that carries a license under the South African Reserve Bank. Our company is a foreign exchange provider. This means that we offer a platform where our customers can send money back home to their friends or family.
When it comes to doing a money transfer to family back home, one of the most important factors to keep in mind would have to be the exchange rate. In this article, we discuss what exactly an exchange rate is and how it is set.
What is an Exchange Rate?
In simple terms, an exchange rate is the value of one currency against another. For example, when we want to find the dollar-to-rand exchange rate, we will look at how many US dollars it costs to buy one Rand.
Exchange rates can either be free-floating or restricted
When an exchange rate is free-floating it means that the exchange rate rises and falls are influenced by the changes made in the foreign exchange market. This system usually represents economic strength between the two countries.
In some countries, they may have restricted currencies. This restriction limits their country’s exchange to within the borders of that specific country. These restrictions are usually inflicted by the government of that country and are placed with the intention to not do any harm to the country’s economy and trade balance. Some of the main reasons behind creating restrictions on the exchange rate include the fact that it prevents a loss of the foreign currency resource and it helps to monitor the movement of financial assets in and out of a country.
Another common type of exchange rate worth mentioning would have to be the fixed exchange rate. This type of exchange rate is also known as the pegged exchange rate and occurs when the value of one currency is fixed or “pegged “against another. Today, most fixed exchange rates are pegged onto the US Dollar. In other cases, a country would choose to fix their currency on to that of their most frequent trade partner.
How Are Exchange Rates Set in South Africa?
South Africa works with a flexible exchange rate system. The value of the Rand is determined by market supply and demand. In the case of the rand, its weakness can be determined by economic problems within the country.
The South African Reserve Bank may intervene at some point in time by purchasing or selling dollars. This act by SARS does not bring any structural change to the economy or have an effect on long-term balance movements, but it does help with short-term fluctuations in the market.
Some of the factors that influence the exchange rate could be:
- Inflation rates
Inflation is one of the most important factors for the exchange rate since it has a great impact on a country’s currency value. If a country’s inflation rate is low, it means that the value of its currency will be high. Similarly, if a country’s inflation rate is high, the value of its currency will automatically drop and become much lower than it was before.
- Interest rates
If a country has a high interest rate, it could lead to a rise in the value of its currency and to the exchange rate. The current interest rate in South Africa is 7% per annum.
- Import and export value
All of the importing and exporting activities of a country can have an impact on their exchange rate, interest rate, and inflation. If the currency of a country is weak, this means that their imports will automatically become more expensive and a strong currency makes imports a lot cheaper. The demand for foreign currencies comes from importing goods and the payment for this service.
Knowing the value of your home currency against a foreign country will help you to successfully transfer money back to your family and friends at home. All you have to do is download the Sikhona Money Transfers app today to start sending money home.
Our mobile application software is available to download from either the Apple App Store or Google Play Store respectively. Once the application software has been successfully downloaded onto your device, you can register as a user and start transferring money online.
The Sikhona Money Transfers app allows you to create beneficiaries who would receive the payment online. All you have to do to create a new beneficiary is fill in their details in the space provided before selecting the “complete” button to add your beneficiary. Once this step has been completed, you can then send money to your family back home by starting a new transaction, filling in the required information, and then waiting to receive a payment reference and collection pin. The collection pin is what you will give to the beneficiary. They will use this pin to access the money at any one of our four hundred and forty thousand points across the word. It is important to note that all of our customers need to be at least eighteen years of age and able to present the necessary documents required to register.
The Best Money Exchange Rate at Sikhona Money Transfers
Use Sikhona Money Transfers for the best money exchange rate on the market. Our professional staff members are fully informed about the exchange rates. This will help you get your money home safely and in the most convenient way. Give us a call on 0861 660 660 today. We look forward to helping you transfer money to your loved ones.