The Euro to South African Rand (EUR/ZAR) exchange rate advanced by around 0.27% on Wednesday afternoon.
After Eurogroup officials stated that Greece will not be presenting reforms in Riga on Friday, the single currency slumped versus most of its major peers. The declination has been relatively fractional, however, after a sizable decline since the opening of the week.
Although South African inflation data printed positively, on the whole, the Rand softened versus the majority of its most traded currency rivals. The depreciation can be linked to ongoing xenophobic riots which have seen immigrant killings. South African authorities have had to deploy military forces in the hope of halting the riot.
The Euro to South African Rand (EUR/ZAR) exchange rate is currently trending in the region of 13.0417.
Euro (EUR) Exchange Rate Edges Lower on Geopolitics
After Athens was forced to take cash from local governments in order to stay afloat, the shared currency softened versus its major peers. Although this has meant that Greece should have enough liquidity to survive until June, fears are that this will see a delay in the reform proposal. This speculation has already shown substance after senior Eurogroup Official Thomas Wieser stated that Greece will not be presenting reforms, as promised, in Riga on Friday.
‘The clock is ticking. There won’t be a new list in Riga, but over the course of May it must finally be reached,’ he told Austrian broadcaster ORF late on Tuesday. ‘The liquidity situation in Greece is already a little tight, but it should be sufficient into June.’
The Euro to South African Rand (EUR/ZAR) exchange rate dropped to a low today of 12.9580.
South African Rand (ZAR) Exchange Rate Softens despite Positive Inflation Data
Although South African Core Inflation rate dipped from 5.8% to 5.7% in March on the year, the regular Inflation Rate improved on both a yearly and monthly basis in March. This had minimal impact on the Rand, however, with riots dominating trader focus. Even an improvement in the outlook of Eskom has not been enough to provoke appreciation.
The South African government deployed troops to volatile hotspots to combat immigrant killings amid xenophobic riots. Nosiviwe Mapisa-Nqakula, the defence minister, said troops would be deployed in the cities where most migrants had been targeted.
‘We come in as the last resort – the army will serve as a deterrent,’ said Mapisa-Nqakula, declining to specify how many soldiers would be involved. ‘There are people who will be critical, but those who are vulnerable will appreciate this decision. Now we are deploying because there is an emergency.’
Euro to South African Rand (EUR/ZAR) Exchange Rate Forecast to Fluctuate
Given that the geopolitical situation in Greece is weighing so heavily on demand for the single currency, and with Eurozone Consumer Confidence data due for publication later on Wednesday, the Euro to South African Rand (EUR/ZAR) exchange rate is likely to fluctuate over the remainder of the European session.
Thursday’s Eurozone and German Composite, Services and Manufacturing PMIs may have the potential to cause EUR/ZAR volatility. However, the riots in South Africa and the situation in Greece are likely to overshadow domestic data publications.
The Euro to South African Rand (EUR/ZAR) exchange rate reached a high of 13.0670 today.