EUR/ZAR Exchange Rate Sinks on South Africa’s Five-Level Lockdown Easing Plan
The Euro to South African Rand (EUR/ZAR) fell by -0.5% today, with the pairing currently trading around 20.47.
The South African Rand (ZAR) rose today after South Africa’s President Cyril Ramaphosa announced he would begin easing the nation’s coronavirus lockdown.
As a result, ZAR investors reacted positively to South Africa’s potential economic recovery, with 1st May set to see Mr. Ramaphosa’s five-level lockdown easing plan put into action.
John Steenhuisen, the Leader of South Africa’s Democratic Alliance, comments:
‘This phased, risk-adjusted model, whereby restrictions are lifted as and when the data suggests it is safe, is critical to protecting precious jobs and ensuring that the livelihood of millions of South Africans is saved.’
Rising oil prices have also uplifted the risk-sensitive South African Rand after Kuwait said they would cut output.
Furthermore, the US’ passing of a $483 billion stimulus plan has also provided a boost for global market sentiment.
Euro (EUR) Exchange Rate Falls as Covid-19 Strikes ‘German Economy with Full Fury’
The Euro (EUR) after today’s release of April’s German IFO Business Climate report, which fell below forecasts from 85.9 to 74.3.
With German business sentiment falling to its lowest level ever recorded, single currency investors are becoming increasingly anxious about the Eurozone’s economy going forward.
Clemens Fuest, the President of the IFO Institute commented:
‘The coronavirus crisis is striking the German economy with full fury. Companies have never been so pessimistic about the coming months.’
Yesterday also saw the European Union leaders agree that a longer-term recovery fund was, however, ‘needed and urgent’ but failed to come to a consensus on how this would be funded.
Consequently, single currency traders are becoming increasingly concerned over a lack of solidarity in the Euro-area, with fears that this could threaten the EU’s unity going forward.
Charles Michel, the President of the European Council, was optimistic however, commenting:
‘It was a promising European Council because we agreed on a very clear framework. We are convinced because this crisis is so very huge it is important to take very strong decisions.’
‘This fund shall be of a sufficient magnitude, targeted towards the sectors and geographical parts of Europe most affected and be dedicated to dealing with this unprecedented crisis.’
EUR/ZAR Forecast: Could the Euro Rise as Risk Sentiment Falls on Covid-19 Fears?
Euro (EUR) investors will be looking ahead to Monday’s European Central Bank Lending Survey. If this is notably downbeat due, then we could see the single currency continue to fall.
The South African Rand (ZAR) will remain sensitive to global risk sentiment. However, should global market mood turn sound, the Rand will begin to shed some of today’s gains.
The EUR/ZAR exchange rate could begin to rise early into next week as global risk sentiment is likely to sink as economies continue to be dragged down by the coronavirus.