The Euro to South African Rand (EUR/ZAR) exchange rate recorded a -0.21% decline in Tuesday’s European trading as speculation that Greece may leave the Eurozone heightened. Although the Greek government remains upbeat that a deal will be made soon, an increasing number of economists forecast a break in the 19-nation currency bloc.
This week has seen the Greek government implement a new negotiations team in an attempt to spur growth after nearly four months of stagnant negotiations. In recent months, the weaker Euro has fallen to 12-year lows versus the US Dollar (EUR/USD) and seven-year lows against the Pound Sterling.
The Euro to South African Rand (EUR/ZAR) exchange rate fell from heights of 13.1184 at the end of March to 12.6997 in the first part of April. However, the EUR/ZAR currency pair has been slowly recovering to reach monthly highs last Friday of 13.2534.
Wednesday is forecast to be an influential day for the Euro exchange rate with the release of Germany’s Consumer Price Index (CPI). However, Thursday will be even more significant with German Unemployment Rate, Unemployment Change and Eurozone CPI all scheduled for publication. South African data will also heat up toward the end of the week with the Private Sector Credit figure out on Thursday.
Friday will be a quiet close to the week for the currency bloc, leaving a lot of the Euro’s movement to any developments between Greece and its creditors. However, South African Producer Price Indexes and Balance of Trade figures are due to emerge on Friday and could impact the EUR/ZAR exchange rate moderately.
The start of the week allowed the South African Rand higher as some investors viewed the government’s negotiation team shakeup as a positive sign a deal could be made.
Currency analyst John Cairns stated: ‘Greece accounts for the change in Rand outlook. Whereas last week it seemed we were set for another default, this week it’s all about the compromise.’
Greek finance minister Yanis Varoufakis has been sidelined as a new team was formed, headed by Greece’s alternate foreign minister, Euclid Tsakalotos. Meanwhile, one official from the opposition New Democracy party has called for Varoufakis’ resignation after last week’s finance minister meeting resulted in an aggressive nudge from Eurozone representatives.
Dora Bakoyanni stated: ‘He has to resign today to make things easier for Mr Tsipras and to liberate him so that it doesn’t seem that he is being sacked on the orders of people abroad.’
The Euro to South African Rand (EUR/ZAR) exchange rate could break through the 13.0300 barrier if favourable Eurozone data emerges this week. However, if a Greek deal is made soon the common currency could rally.