The Euro to South African Rand (EUR/ZAR) exchange rate advanced by around 0.41% on Wednesday afternoon.
After the European Central Bank (ECB) kept rates on hold, as most predicted would be the case, the single currency was little changed from its bearish run. With geopolitics dominating trader focus, European economic data has had minimal impact on shared currency movement.
The South African Rand, meanwhile, softened as it tracked Euro losses. The rising US Dollar also weighed on demand for the South African asset. Further declination can be attributed to ongoing difficulties with South Africa’s main power provider, Eskom. Positive results from domestic data had minimal impact.
The Euro to South African Rand (EUR/ZAR) exchange rate is currently trending in the region of 12.8342.
Euro (EUR) Exchange Rate Softens on Geopolitics
European economic data had minimal impact on the common currency on Wednesday as geopolitics, once again, dominated trader focus. The ECB rate decision also had no impact given that rates remained unchanged, as most economists had predicted. The accompanying press conference was delayed after a protestor jumped onto the desk.
The main cause of the Euro downtrend is mounting speculation that the Greek government won’t be able to satisfy Eurogroup officials and will be forced to exit the Eurozone. Should the nation fail to acquire the desperately needed relief funds, there is an extremely high likelihood that Greece will default on its loan payments.
The Euro to South African Rand (EUR/ZAR) exchange rate dropped to a low of 12.7541.
South African Rand (ZAR) Exchange Rate Dives on Eskom
The combination of the Euro declination and US Dollar strength has seen the South African Rand soften versus the majority of its most traded currency rivals. Positive domestic Retail Sales growth wasn’t enough to initiate a recovery.
One major factor contributing to the Rand depreciation is continued issues with the power provider Eskom. Having dismissed many of its staff for vandalism during a strike, the offer to rehire workers was rejected as the union said that their demands had not been met.
‘They are not satisfied with Eskom’s offer to reinstate workers with full pay, they want all their demands addressed before they return to work,’ said Steve Nhlapo, head of collective bargaining at the National Union of Metalworkers of South Africa.
Euro to South African Rand (EUR/ZAR) Exchange Rate Forecast to Hold Gains
Given the lack of domestic data to curb the trend, and with the US Dollar showing no signs of resuming declination, the Euro to South African Rand (EUR/ZAR) exchange rate is likely to hold gains for the remainder of the European session.
EUR/ZAR volatility on Thursday is likely to be the result of fluctuations in the currency market and geopolitics given the lack of influential data pertaining to both Europe and South Africa.
The Euro to South African Rand (EUR/ZAR) exchange rate climbed to a high of 12.8793 today.