While the Eurozone has put out some supportive ecostats lately, these have failed to give the Euro an edge against the more dominant South African Rand.
The Rand’s wild fluctuations have been caused primarily by political news, as controversial President Jacob Zuma has once again been faced with the possibly of a forced removal from government.
Last week, the Euro made little overall progress against the Rand, starting trading around 15.18 on Monday and closing against ZAR at 15.17 on Friday.
Euro Update: Historically Low Interest Rates Fail to Reassure EUR Investors
Although the Euro should have been aided by a recent string of supportive announcements, the single currency has failed to capitalise, instead dipping against the South African Rand to 14.86.
The biggest Eurozone news of late was the fact that the region’s CPI increased on the month in October while GDP held firm at an annual reading of 1.6%. Germany also record a drop in its October unemployment rate from 6.1% to 6%.
Elsewhere, the Eurozone manufacturing PMI has risen in October, while the overall unemployment rate for September has remained at a historically low 10%. Commenting on the rate, Capital Economics European Economist Jack Allen said;
‘September’s Eurozone unemployment data suggests that, while the labour market is strengthening, it is doing so at a slow pace’.
South African Rand Boosted on Growing Opposition to Zuma
The South African Rand has gone from strength to strength during a busy week for the nation’s political system.
As well as Finance Minister Pravin Gordhan seeing fraud charges against him dropped, controversy-ridden and potentially corrupt President Jacob Zuma has been the focus of an opposition-led vote to see him removed from office in the coming week.
This all came about after Zuma and other senior government officials were investigated for links to the wealthy Gupta family; Zuma initially tried to block the investigation, but after dropping his objection was soon implicated in the findings.
Since then, the opposition Democratic Alliance (DA) has voiced its intention to rally parliament against the President, which could finally see him removed from office. Although the latest Rand rally shows that investors are hopeful, it is worth noting that Zuma has
faced exile previously
and survived.
EUR/ZAR Exchange Rate Forecast
Looking ahead, Euro/South African Rand exchange rate movement may occur following the release of Eurozone composite and services PMIs and retail sales for October.
In terms of news from South Africa, as well as next week’s DA efforts to unseat Zuma, the Rand could also be shifted by the gold, mining and manufacturing production stats for September, due on November 10
th
.
With the Eurozone news, Friday’s PMIs are expected to rise while Monday’s retail sales are set to improve considerably on the month – both Euro-supportive results.
In the event that Zuma does find himself removed, the Rand could well reach unprecedented highs against the Euro. On the production front, annual overall mining is expected to fall, while improvements are expected for the manufacturing figures.