Exchange Rate Swazi lilangeni

The Swazi lilangeni (SZL) exchange rate has experienced fluctuations over the years. Since its introduction in 1974, the currency has gone through various stages. Initially, it was pegged to the South African rand (ZAR) at a 1:1 exchange rate. However, in 1986, the SZL was devalued and linked to a basket of currencies, including the ZAR, British pound, and United States dollar. This revised exchange rate system played a major role in stabilizing the currency.

Variations in the SZL Exchange Rate

The SZL exchange rate has shown both gradual changes and more significant fluctuations over time. Factors such as economic growth, political stability, inflation rates, and external shocks can influence its variations. For example, during periods of economic downturn or political uncertainty, the SZL may weaken against major currencies. Conversely, when the Swaziland economy performs well or there is higher investor confidence, the currency may strengthen.

Significance of SZL in the Global Economy

The significance of the SZL in the global economy is relatively low. Swaziland's economy is small and heavily reliant on agricultural production, particularly sugar exports. As such, the SZL has limited international exposure and is not widely used for global transactions. Its importance primarily lies in its role as a medium of exchange within the country.

Shocks Experienced by SZL and Correlation with Other Currencies

The SZL, like many other currencies, has faced various shocks over time. External shocks such as oil price fluctuations, global economic crises, and changes in investor sentiment can affect the exchange rate. Additionally, as the SZL is partly pegged to the South African rand, it exhibits a strong correlation with the ZAR. Movements in the ZAR often influence the SZL exchange rate, given the close economic ties between Swaziland and South Africa.