Euro South African Rand (EUR/ZAR) Exchange Rate Flat as Rand Hits One-Month Low

Euro South African Rand (EUR/ZAR) Exchange Rate Muted as ZA’s Moody’s Rating at Risk

The Euro South African Rand (EUR/ZAR) exchange rate remained muted on Tuesday morning, leaving the pairing trading at around R16.0908.

The Rand retreated on Tuesday thanks to a weak economic outlook for the country. This also caused the South African currency to hit a one-month low.

With state utility Eskom struggling and weighing on business confidence and the economy merely edging along, ZAR slumped.

Markets were spooked on Tuesday after China reported the fourth death from the new strain of coronavirus. Added to this, the number of cases continued to rise.

On Monday the International Monetary Fund (IMF) slashed growth forecasts for the country to 0.8% for 2020, also weighing on the Rand.

Meanwhile, South Africa’s final investment-grade rating from Moody’s has been put at risk. President Cyril Ramaphosa has struggled to push through vital reforms and stem the rising debt levels.

Euro (EUR) Flat despite Brighter Mood Amongst German Investors

The single currency was left flat against the South African Rand despite data revealing that German investor morale increased.

The mood amongst German investors brightened more than expected this month. This sparked hopes that the country may not have been as badly hurt by trade tensions as originally expected.

ZEW revealed economic sentiment among investors jumped from 10.7 to a higher-than-expected 26.7.

According to ZEW President, Achim Wambach, the brighter mood has been attributed mainly to the settlement of trade tensions between the US and China.

However, this did little to buoy the Euro against the Rand, as the pairing remained muted.

Euro South African Rand Outlook: EUR Under Pressure Ahead of ECB Meeting?

Looking ahead to Wednesday, the South African Rand (ZAR) could rise against the Euro (EUR) following the release of the country’s inflation data.

If South African inflation impresses, it is likely this will provide an upswing of support and buoy the Rand.

Meanwhile, the single currency is likely to remain under pressure ahead of the European Central Bank’s (ECB) first monetary policy meeting of the year. The meeting is likely to launch a rethink of the bank’s inflation goal, which it has been unable to meet since 2013.

If the bloc’s central bank is overly dovish, it is likely to dampen EUR sentiment and send the Euro South African Rand (EUR/ZAR) exchange rate lower.

Millie Empson

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