Euro South African Rand (GBP/ZAR) Exchange Rate Plummets on Signs the Pandemic is Peaking
The Euro South African Rand (GBP/ZAR) exchange rate plummeted by around -0.9% this morning. This left the pairing trading at around R19.5894.
The South African Rand rallied against the Euro despite the coronavirus hurting the South African economy.
The Rand gained support today on signs the pandemic was peaking and OPEC and its allies may agree to cut oil output.
ZAR could gain further support following a video conference later today, if oil producing countries agree to cut output.
Meanwhile, with the South African economy already in a recession, it is expected to take a larger hit as the government implemented a three-week lockdown to help slow the spread of coronavirus.
However, the recent boost in risk appetite has likely sparked an upswing in the Rand, sending it higher against the safe-haven Euro.
Bianca Botes, executive director at Peregrine Treasury Solutions noted:
‘The market remains optimistic that the virus outbreak might be peaking, enhancing risk appetite in support of riskier currencies.’
Euro (EUR) Falls as EU Ministers Fail to Reach Agreement
Meanwhile, some European countries such as Austria and Denmark are planning exit strategies from a coronavirus lockdown.
Commenting on this, Marshall Gittler, head of investment research at BDSwiss noted:
‘I think their actions are likely to improve sentiment towards the euro as investors realize that the first countries to take steps to deal with the virus will be the first ones to get back to some semblance of normality.’
Meanwhile, single currency sentiment was left dampened during yesterday’s session as Eurozone finance ministers failed to come to an agreement on EU-wide coronavirus stimulus measures.
The key stumbling block for ministers was the conditions attached to countries getting support from the European Stability Mechanism.
Finance ministers are scheduled to have another meeting, although if divisions remain it will likely send the single currency lower today.
Euro South African Rand Outlook: OPEC Meeting in Focus
Looking ahead, the South African Rand (ZAR) will extend today’s gains against the Euro (EUR) following the OPEC meeting.
If OPEC and its allies agree to cut oil production to boost prices as coronavirus has dampened demand for the commodity, the Rand will rise.
Added to this, if investors continue to move away from safe-haven currencies, the Euro South African Rand (EUR/ZAR) will slump further this week.