Over the past week, the Euro to South African Rand (EUR/ZAR) exchange rate was trending within the range of 13.4561 to 14.0410.
Since it transpired that Greek MPs voted to accept the reform terms outlined by creditors in order to unlock bailout funds, the shared currency strengthened versus its major peers. Easing tensions regarding a Greek exit from the Eurozone, in conjunction with improving ecostats from Euro-area nations, has also seen heightened demand for the common currency.
Conversely, the South African Rand has been generally bearish versus its currency rivals in response to increasing speculation of a near-term Federal Reserve rate hike. As an emerging-market currency, a bullish US Dollar is bad news for the South African Rand. Additional losses can be attributed to ongoing difficulties with South Africa’s leading energy provider Eskom. Eskom has had to resort to long periods of load shedding as the tired electrical grid and outdated equipment cannot handle the surge in demand. The South African Reserve Bank (SARB) also hiked the benchmark interest rate last week, although it had a minimal impact with US Dollar strength micrifying central bank hawkishness.
The Euro to South African Rand (EUR/ZAR) exchange rate dived by around -1.2% during Tuesday’s European session.
In response to concerns that the recent shared currency uptrend was overdone, the Euro declined versus its major peers during Tuesday’s European session. With Greece and its creditors a long way from ending negotiations, the prospect of yet more geopolitical uncertainty has weighed on demand for the single currency. Additionally, Italian Business Confidence and Consumer Confidence failed to meet with expectations in July.
The Rand rallied versus its peers on Tuesday as futures traders fear long delays to a Federal Reserve rate hike. With crashing commodity prices causing inflationary pressures to ease, and with fears regarding the fallout from the troubles with China’s equity markets, many investors believe that the Federal Open Market Committee (FOMC) will return to ‘patience’ rhetoric. The Rand’s uptrend has come even as troubles with Eskom continue to accelerate, with the long period of rolling blackouts causing a huge dent to South Africa’s economic growth.
The Euro to South African Rand (EUR/ZAR) exchange rate was trending in the region of 13.8239 during Tuesday’s European session.
Looking ahead, Wednesday will be of significance to those invested in the Rand with several South African publications due for release. Private Sector Credit, Unemployed Persons and Unemployment Rate will all have the potential to provoke changes for the Rand. Wednesday’s economic docket is sparse of European publications, although German Consumer Confidence may impact upon Euro movement. Developments in Greece, however, have the potential to overshadow domestic data results.
Thursday will see several influential European economic releases. Of particular significance will be German Unemployment Rate and German Consumer Prices. The South African Producer Price Index is also likely to impact upon the EUR/ZAR exchange rate. Friday will also see volatility for the pairing with the Eurozone Consumer Price Index and South Africa’s Trade Balance data due for publication.
The Euro to South African Rand (EUR/ZAR) exchange rate was trending within the range of 13.8098 to 14.0212 during Tuesday’s European session.