EUR/ZAR Exchange Rate Muted in Run up to SARB Rate Decision
The Euro to South African Rand (EUR/ZAR) exchange rate is trading up around 0.2% this morning as markets brace for the South African Reserve Bank’s (SARB) first rate decision of the year.
At the time of writing the EUR/ZAR exchange rate is up at 15.6306 this morning on the inter-bank market, but still trading close to a one-month low.
South African Rand (ZAR) Exchange Rates Steady Ahead of SARB Rate Decision
After making steady gains throughout the week, the South African Rand (ZAR) is down slightly against the Euro (EUR) and the majority of its other peers this morning as markets await the South African Reserve Bank’s first policy meeting of 2019.
This will also be the SARB’s first meeting since it raised hiked interest rates back in November and while no policy changes are expected from the bank today, ZAR investors will be looking for any hints at the bank’s intentions for the coming year
Analysts at TD Securities are confident that the SARB will continue hiking rates in 2019, suggesting:
‘At the November meeting the MPC narrowly decided to hike by 25bps, even though their revised forecasts showed a lower inflation peak in 2019 than the prior ones. So we see little reason for the MPC to do anything today. We expect the tone of the statement to be broadly unchanged with the MPC continuing to see the risks to the longer-term inflation outlook as being to the upside.’
Conversely some analysts warn that growing concerns of a slowdown in global growth this year could result in a more cautious outlook from the SARB, an outcome that is likely to force the Rand to relinquish some of its recent gains.
Euro (EUR) Exchange Rates Muted as Eurozone Inflation Slides to Eight-Month Low
The Euro (EUR) meanwhile is also finding little support from currency markets, following the publication of the Eurozone’s latest CPI figures
According to data published by Europe’s statistics agency, inflation in the bloc was confirmed to have slumped to an eight-month low last month, sliding from 1.9% to 1.6%.
While this drop was mostly driven by a rout in oil prices at the end of last year, with core inflation holding steady, it is still enough for some investors to express concerns that the European Central Bank (ECB) may continue to leave rates on hold in 2019.
EUR/ZAR Exchange Rate Forecast: Dovish ECB to Drag on Euro?
Looking past this afternoon’s SARB rate decision, the short-term outlook for the Euro South African Rand (EUR/ZAR) exchange rate remains gloomy, with next week’s Eurozone data likely to continue to exert pressure on the single currency.
Markets will be given their first look at how the bloc is faring in 2019 as the publication of the Eurozone’s latest PMI figures takes place, with the Euro likely to weaken if growth remained soft in January.
On top of this the ECB will hold its own policy meeting next week, with analysts expecting a more dovish outlook from the bank given recent fears regarding a Eurozone slowdown.
Meanwhile, the Rand may also suffer next week, if an expected slide in China’s fourth quarter GDP figures dampens market risk appetite.