The Euro to South African Rand (EUR/ZAR) exchange rate dived by around -0.50% on Tuesday afternoon.
With Greece seemingly unlikely to pay the money owed to the International Monetary Fund (IMF) by the deadline on Thursday, the single currency slumped versus nearly all of its most traded currency competitors. Although the IMF have reassured Greece that they will be flexible in the analysis of the proposed reforms, it is still very unlikely that the debt-riddled country will have the requisite funds to meet with repayment obligations.
The South African Rand, meanwhile, declined versus many of its major peers in response to ongoing difficulties regarding the country’s leading energy provider, Eskom. Predictions of yet more black-outs is weighing heavily on investor confidence.
The Euro to South African Rand (EUR/ZAR) exchange rate is currently trending in the region of 12.8311.
Euro (EUR) Exchange Rate Softens on Greece Situation
With Athens set to make a repayment to the IMF on Thursday, the single currency dived as investors feared that the nation is very unlikely to find the funds. Although there will be a 30-day extension period should Greece default on its loan, there is still little chance that the requisite funds will be raised in time. Athens did state, however, that the IMF was willing to be flexible in their analysis of the proposed reforms submitted recently.
‘(IMF Chief Christine) Lagarde … stressed that, in Greece’s case, the Fund is willing to show utmost flexibility in the way in which the government’s reforms and fiscal proposals will be evaluated,’ a ministry statement said.
Although Eurozone Investor Confidence showed the largest improvement in three years, the fact that it failed to meet with the median market forecast figure also weighed on demand for the common currency.
The Euro to South African Rand (EUR/ZAR) exchange rate dropped to a low today of 12.7799.
South African Rand (ZAR) Exchange Rate Softens on Eskom
With the US Dollar strengthening amid speculation of hawkish Federal Open Market Committee (FOMC) minutes from their most recent policy meeting, emerging market currencies such as the South African Rand softened versus many of its major peers.
Aiding the Rand’s downtrend was news from Eskom that more black-outs have been scheduled. ‘It does not necessarily mean that we’re going to load shed, all we’re saying is at this stage that the risk is high and we’re urging customers to also reduce the load so that we can avoid the possibility of load shedding.’
‘If we have technical faults, we would load-shed… We are, however, doing everything to keep the system intact,’ said Eskom spokesman Khulu Phasiwe.
Euro to South African Rand (EUR/ZAR) Exchange Rate Forecast to Hold Losses
Given that the single currency is unlikely to sustain gains until the situation with Greece has found a solution, the Euro to South African Rand (EUR/ZAR) exchange rate is likely to hold losses for the remainder of Tuesday’s European session.
Geopolitics is likely to continue to drive changes for the EUR/ZAR exchange rate given the lack of domestic data for both Europe and South Africa on Wednesday. With that being said, however, German Factory Orders data may have an impact.
The Euro to South African Rand (EUR/ZAR) exchange rate climbed to a high of 12.9290 today.