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Euro to Rand Update: ECB Press Conference Triggers 1% EUR ZAR Rise

The Euro has firmed against the Rand today, following a well-received speech from the European Central Bank (ECB) President.

  • EUR ZAR rate jumps to 15.1487 – ZAR EUR trades down at 0.0660
  • Euro soars as ECB repeats message – President Draghi raises hopes of QE action
  • Rand tumbles on Fitch forecast – Poor reception to government growth plans
  • Further Euro gains possible on trade balance stats – Upcoming ZA unemployment forecast to rise

The EUR ZAR exchange rate has spiked up to the best in a week, coming in around 15.1487.

Euro Surges on Autumn Policy Shift Hopes

At a time of immense Eurozone optimism, the Euro has surged by 1% against the South African Rand. This comes after a press conference by ECB President Mario Draghi.

Speaking after another ECB interest rate freeze, Draghi largely delivered a boilerplate statement on monetary policy. One of the few deviations to the usual script, however, was the news that policymakers will discuss quantitative easing in Autumn.

Despite Draghi’s speech largely being cautious or a rerun of previous comments, traders latched onto the Autumn news as a possible sign of shifting policy in the future.

In other Eurozone news, the July consumer confidence flash has fallen from -1.3 points to -1.7. This was against forecasts, but failed to devalue the Euro.

South African Rand Slides on Gloomy Fitch Forecast

The Rand has dropped to a rate of 0.0663 against the Euro today. This has been near a weekly low, but still around the best exchange rate since early July.

The South African government has been in the firing line today, with ratings agency Fitch taking issue with government growth plans. On July 13th, ZA Finance Minister Malusi Gigaba unveiled a 14-point program for boosting the national economy.

In a succinct statement, Fitch poured cold water on the government’s plans;

‘The South African government’s newly announced Inclusive Growth Action Plan is unlikely to significantly boost economic growth prospects’.

The ratings agency has also scrutinised government efforts to construct nuclear power stations across the country, estimated to cost R100tr. As with the broader growth strategy, Fitch economists believe this project will come up short;

‘Government messages on the costly nuclear power plan have changed repeatedly and the issue is unlikely to be settled until after the electoral conference in December 2017 that will choose the new ANC head’.

Euro Rand Forecast: Spanish Trade Balance could Further EUR ZAR Gains

The Euro will have a chance to rise higher against the Rand on Friday, when Spain’s trade balance for May is announced.

Projections are for a slight deficit reduction, which would be another positive development after Draghi’s previous remarks.

The next South African news isn’t out until July 25th, when unemployment results will come out. Q2 unemployment is forecast to rise, which could trigger an early-week Rand drop.

Current Interbank EUR ZAR Exchange Rates

At the time of writing, the Euro to Rand (EUR ZAR) exchange rate was trading at 15.1487 and the Rand to Euro (ZAR EUR) exchange rate was trading at 0.660.