The Euro to Rand pairing slipped over the course of local trading on Tuesday as investors digested some disappointing German business climate/expectations figures.
The Euro edged lower against almost all of its most traded rivals as business sentiment in the Eurozone’s largest economy declined.
The German IFO business climate measure slid from 111.3 to 110.7 in March.
Common currency losses were also triggered by comments issued by a European Commission official regarding the strength of the Euro.
Similarly, Jens Weidmann (the head of Germany’s central bank) asserted that the European Central Bank hadn’t ruled out the possibility of buying Eurozone government bonds/top-rated assets from the private sector.
Weidmann was quoted by Reuters News Agency as stating; ‘But the overall question is one of effectiveness, costs and side-effects. We are currently discussing the effectiveness of these measures. The intended effects would then have to be weighed against the costs and side-effects. The unconventional measures under consideration are largely uncharted territory. This means that we need a discussion about their effectiveness and also about their costs and side-effects.’
The German financial chief also mentioned the strength of the Euro, commenting that the introduction of negative interest rates could help counter the effect of a strong domestic currency.
The Rand meanwhile was putting in a fairly steady performance ahead of the South African Reserve Bank’s rate decision, due to take place on Thursday.
While the majority of investors believe that the Reserve Bank will leave interest rates unaltered, others have speculated on the potential outcome.
In the Financial Times, for example, a London-based researcher claims that ‘A renewed slump in the currency before the meeting could prompt another rate hike but, as things stand, we think the SARB will refrain from raising rates this time around.’
While today’s US news (including a report showing a stronger-than-forecast improvement in consumer confidence) could have an influence on the EUR/ZAR pairing investors will also be looking ahead to tomorrow and Germany’s GfK consumer sentiment figure.
The confidence measure is expected to come in at 8.5 in April, unchanged from the previous month.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3792 ,
Euro,,British Pound,0.8348 ,
Euro,,New Zealand Dollar,1.6121,