The Euro to South African Rand (EUR/ZAR) exchange rate softened by around -0.77% on Wednesday afternoon.
With tensions in Greece showing little sign of resolution, the shared currency softened versus its major peers. The depreciation can be linked to speculation that the latest set of proposals submitted by Athens will not be accepted by the European Commission. Fears that the informal meeting between the Greek, German and French heads of state will not take place have also weighed on demand for the common currency.
The South African Rand, meanwhile, strengthened versus many of its rivals despite lower-than-anticipated Business Confidence. The appreciation can be linked to the weakened US Dollar causing increased demand for high-yielding assets. Even continued issues with the nation’s leading energy provider, Eskom, haven’t been enough to prevent the Rand uptrend.
The Euro to South African Rand (EUR/ZAR) exchange rate is currently trending in the region of 13.9368.
Euro (EUR) Exchange Rate Forecast to Soften versus the Rand as Greek Woes Dominate Trader Focus
Although there was a complete absence of significant European economic data on Wednesday, the shared currency plummeted versus its major peers. The depreciation is the direct result of geopolitical tensions in Greece and fears that the Hellenic nation will not secure bailout funds. A member of German Chancellor Angela Merkel’s government, Michael Fuchs, has added more downward pressure on the single currency after stating that the latest Greek proposals were ‘not serious’.
As time becomes Greece’s enemy, the likelihood that Athens will secure bailout funds and remain as part of the Eurozone is small at best. Many fear that the Greek’s refusal to budge on electoral red-lines, and the Eurogroup’s insistence on extensive austerity within a country crippled by a lack of money, will lead the Hellenic nation to a forced exit from the Eurozone.
The Euro to South African Rand (EUR/ZAR) exchange rate dropped to a low of 13.9018 today.
South African Rand (ZAR) Exchange Rate Forecast to Strengthen against the Common Currency despite Lower-than-Expected Business Confidence
South Africa’s solitary economic data publication printed poorly on Wednesday. Second-quarter Business Confidence was forecast to drop from 49 to 47, but the actual result fell to 43. The sharp decline in confidence is likely to be linked to rolling blackouts and continued issues with Eskom.
‘The lack of information, transparency and government planning, together with the irregularity of power outages has made it increasingly difficult for CEOs to plan for the long term,’ the Merchantec Capital report explains. ‘The ongoing power crisis is a major contributor to the fairly grim outlook of CEOs in South Africa demonstrated by a drop in confidence in the basic resources, industrials, financial, consumer good and technology sector.’.
Despite all this, the Rand advanced thanks to a weak US Dollar amid difficulties with the Federal Reserve and speculation of a delay to a Fed cash rate increase.
Euro to South African Rand (EUR/ZAR) Exchange Rate Forecast to Hold Losses
Although Wednesday afternoon will see US data which may impact upon demand for the South African asset, the significant depreciation of the Euro and the South African Rand (EUR/ZAR) exchange rate should see the single currency hold losses. Expect notable fluctuations surrounding the Brussels Summit and the proposed informal discussion between Tsipras, Merkel and Hollande.
Thursday could see heightened EUR/ZAR volatility despite a complete absence of significant European economic data. Geopolitics in Greece and US Dollar movement will certainly have an impact upon the EUR/ZAR pairing. For those invested in the Rand, South African Mining and Manufacturing Production data publications will be of interest.
The Euro to South African Rand (EUR/ZAR) exchange rate reached a high of 14.0716 today.