Euro South African Rand (EUR/ZAR) Exchange Rate Falls on Disappointing Eurozone PMI Figures
The Euro South African Rand (EUR/ZAR) exchange rate is down around 0.5% today and is currently trading at R15.6539 on the inter-bank market.
Today saw the European Central Bank (ECB) announce its latest interest rate decision, with the bank opting to leave them unchanged at 0% due to signs of slowing economic growth in the Eurozone.
It was the first ECB meeting since since the central bank concluded its QE programme last December, and although it was no surprise that rates were kept at 0% the bank did state that they would remain ‘at their present levels at least through the summer of 2019.’
The Euro (EUR) fell against the South African Rand (ZAR) earlier today after the printing of some disappointing Eurozone PMI figures for January, with manufacturing and services falling below expectation.
Germany’s manufacturing PMI figures for January also fell below expectation to 49.9 – its worst in four years.
Phil Smith, Principal Economist at HIS Markit, commented:
‘Manufacturing fell into contraction in January as the sector’s order book situation continued to worsen. . . Weakness in the auto industry was once again widely reported, as was a slowdown in demand from China.’
The Euro has also been affected by ongoing UK Brexit debates, with increasing fears that the UK will leave the EU without a deal.
ZAR/EUR Exchange Rate Rises as Ramaphosa Promises to ‘Correct Mistakes’
The South African Rand (ZAR), meanwhile, benefited yesterday after its top trading partner, China, announced that it would increase fiscal spending in 2019 to bolster its economy.
Chinese Vice President Wang Qishan commented:
‘There will be a lot of uncertainties in 2019, but China’s economy will continue to achieve sustainable growth. . . Speed does matter. But what really matters is the quality and efficiency of our economic development.’
ZAR has also benefited from optimistic comments from South African President Cyril Ramaphosa who said at the World Economic Forum yesterday that the country would improve and grow into 2019.
Ramaphosa stated:
‘We have entered a new period of hope and renewal, and over the last year we have taken decisive steps to correct the mistakes of the recent past and put the country back on the path of progress that we embarked upon in 1994.’
EUR/ZAR Forecast: South African Rand Could Rise if Chinese Economy Recovers
Euro (EUR) investors will be looking ahead to Friday which will see the publication of Germany’s IFO business climate figures for January, with any signs of a decrease potentially weakening the single currency further.
Friday will also see the publication of Germany’s IFO expectations figures for January, which are also expected to decrease.
EUR traders will be keeping a close eye on developments in the UK, with any signs of Theresa May’s Brexit ‘Plan B’ gaining traction in the House of Commons potentially easing fears of a no-deal and lending some much-needed support for the single currency.
South African Rand (ZAR) investors will be sensitive to any political or global economic changes in the coming week, with few South African data releases of note until later next week, any signs that China’s economy is recovering will likely weaken the EUR/ZAR exchange rate.