Bright Outlook from OECD Triggers Euro to Rand (EUR/ZAR) Exchange Rate Rise
The Euro has made a minor advance against the South African Rand today, following a Eurozone growth forecast upgrade from the OECD.
The organisation has predicted 2.3% economic growth in the single currency bloc in 2018 and 2.1% growth in 2019.
The outlook has gone some way to reassure Euro traders, who have recently been worrying about the effects of US steel tariffs on the Eurozone economy.
Rand to Euro Exchange Rate Declines on Steel Tariff Analysis
The Rand has fallen in value against the Euro on 13th March, as the government considers the implications of a US tariff on metals imported into the country.
The tariff on steel and aluminium will be activated on 23rd March and the Ministry of Trade and Industry has been considering the potential impacts of these charges.
In the words of ministry officials;
‘South Africa is studying the proclamation and its implications for the domestic industry in South Africa.
The Ministry of Trade and Industry is fully engaged with the matter and continues to have discussions with the US on this issue.
A formal [exemption] submission will also be made to the US, as is provided for in the proclamations’.
If South Africa cannot be granted an exemption from the punitive charges then the Rand may fall further against the Euro.
Euro to South African Rand Exchange Rate Forecast: Risk of EUR/ZAR Loss on Output Data
The Euro has advanced against the Rand today, but could fall back on 14th March when Eurozone employment change and industrial output stats come out.
The employment change figures are tipped to show a slight slowdown in quarterly growth, but a year-on-year increase.
These are broadly positive forecasts, but the situation is less ideal for Eurozone industrial production projections.
Year-on-year production levels are expected to fall from 5.2% to 4.7%, while a worse month-on-month decline from 0.4% to -0.4% has been forecast.
A more unpredictable factor on 14th March will be European Central Bank (ECB) President Mario Draghi, who will be giving a speech in Frankfurt.
If Mr Draghi discusses future monetary policy plans then the Euro could shift – hints of tightening policy measures in 2018 could boost the EUR/ZAR exchange rate.
Future South African economic news will consist of mining production data and a business confidence reading; both are out on 15th March.
Mining and gold production levels are predicted to have picked up in January; higher activity in these sectors could boost the Rand to Euro exchange rate.
Business confidence levels in Q1 2018 are also tipped to have risen, so the ZAR/EUR exchange rate could steadily rise on the coming Thursday.