Euro to South African Rand Climbs despite Eurozone Economic Jitters and Risk-Sentiment
Despite concerns about Germany’s slowing economy and higher demand for risky currencies this week so far, the Euro to South African Rand (EUR/ZAR) exchange rate has advanced this week and has sustained most of its gains.
After risk-aversion made it easier for EUR/ZAR to climb from 15.25 to 15.45 last week, EUR/ZAR saw another jump in demand on Monday and briefly touched on a fresh fortnight high of 15.59.
At the time of writing on Tuesday, EUR/ZAR trended closer to the level of 15.53.
Investors were hesitant to buy the Euro (EUR) too much, as the shared currency is weighed by concerns about a potential recession in Germany.
However, the South African Rand (ZAR) plummeted on Monday in reaction to the latest issues from Eskom, a South African energy company.
Euro (EUR) Exchange Rates Struggle to Hold Best Levels on German Economic Fears
The Euro jumped versus the South African Rand yesterday due largely to weakness in the Rand.
While the Euro was able to sustain most of its Monday gains though, the currency slipped back from its best levels rather than continuing to climb.
This was due to broad weakness in the Euro over the past few weeks, due to a worsening Eurozone economic outlook and rising market fears that the Eurozone’s biggest economy could be headed towards a recession.
Recent German data has come in well short of expectations. Not only are analysts now expecting Germany’s economic slowdown will last longer than previously feared, there are also building fears that a recession is on the cards.
Italy is suffering from a recession as well. Overall, Eurozone data has been disappointing and has given investors little reason to keep buying the Euro.
South African Rand (ZAR) Slumps as Eskom Power-Cuts Persist
South Africa’s energy woes continue this week, as Eskom announced it would be ramping up its load-shedding to the rare Stage 4 for the first time since 2015.
Stage 4 load shedding allows for 4000 Megawatts of the national load to be shed.
Eskom has been the subject of a crisis in recent months and has been seemingly unable to meet South Africa’s power demands.
Load-shedding is when Eskom rations certain areas in order to lighten the load of demand, and Stage 4 is the highest stage of load-shedding.
The schedule shifted down to Stage 3 on Tuesday, but there are concerns that these long periods of outages will only continue in the coming months.
Outages across South Africa and expectations for more have kept pressure on the South African Rand lately and are expected to remain a downside risk.
Euro to South African Rand (EUR/ZAR) Exchange Rate Investors Anticipate Data
The Euro to South African Rand exchange rate could find some support and rise in the coming days, if upcoming Eurozone data impresses investors.
Wednesday will see the publication of the Eurozone’s industrial production stats from December, followed by German and Eurozone growth projections on Thursday.
German growth will be especially influential. If it beats expectations it could soften concerns about Germany’s economy and leave the Euro more appealing.
EUR/ZAR could also rise if Wednesday’s South African retail sales results disappoint, or if South Africa sees another period of concerning outages that could negative impact economic activity.
Of course, poor Eurozone data would limit the Euro’s potential for gains this week.
The Euro to South African Rand (EUR/ZAR) exchange rate may also shed its recent gains if South African energy concerns lighten or if US-China trade negotiations go well enough to bolster market demand for risky emerging market currencies like the South African Rand.