EUR/ZAR Exchange Rate Increases as South African Investors Await State of Nation Address
The Euro South African Rand (EUR/ZAR) exchange rate edged higher today and currently trading around R16.1303 on the interbank market.
The South African Rand (ZAR) fell against the Euro (EUR) today as the SA economic situation looks increasingly bleak, with expectations running low that President Ramaphosa’s State of the Nation Address will take an upbeat tone.
The South African Federation of Trade Unions’ (SAFTU) Secretary-General, Zwelinzima Vavi, commented:
‘We expect more hell coming out of the State of the Nation Address. The fundamental difficulties, the structural deficiencies we inherited from the apartheid, the colonial economy will not be addressed. They will be no change of direction.’
SA President Ramaphosa’s speech is expected to cover the upcoming ‘tough economic challenges’ for South Africa.
The Euro, meanwhile, edged higher against ZAR following the printing of the French GDP figures for the first quarter, which came in as forecast at 0.3%.
EUR/ZAR Exchange Rate Edges Higher despite Rising Eurozone Economic Concerns
EUR, however, has remained generally subdued against many of its competitors, with rising concerns wracking confidence in the Eurozone’s economy.
Olli Rehn, one of the Governing Council members of the European Central Bank (ECB), commented:
‘I am concerned about the Eurozone economy but we are not forecasting any recession. We are ready to act as appropriate unless there is an improvement in economic conditions.’
Italy is still remaining in focus for many single currency traders, with Italian Prime Minister Prime Minister Giuseppe Conte in discussions with EU leaders over avoiding possible disciplinary actions over Rome’s debt crisis.
Euro investors are also becoming increasingly concerned that Italy’s economy could enter another recession in the second-quarter.
The Italian National Institute of Statistics said in its annual report:
‘The probability GDP contracted in the second quarter is relatively high — 0.65 on a scale that has a zero value for expansion and a value of 1 for economic contraction.’
EUR/ZAR Forecast: South African Rand Could Benefit from Easing Global Trade Tensions
Euro traders will be awaiting the publication of the preliminary German Markit Manufacturing PMI figures for June tomorrow, which are expected to improve.
These will be followed by the flash Eurozone Markit PMI Composite figures, which are, however, forecast to hold at 51.8.
Any marked improvement in either of these data releases could provide the Euro with some much needed uplift, as doubts are beginning to set in over the Eurozone’s economic health.
South African Rand traders will be paying close attention to global political developments, with China being one of SA’ largest trading partners.
Signs of a consensus emerging between the US and China over trade could provide some uplift for the ZAR.