The Euro to South African Rand (EUR/ZAR) exchange rate climbed by around 1.09% on Wednesday afternoon.
Although Eurozone retail sales data failed to impress, the common currency climbed versus the majority of its most traded currency competitors. The advance can be attributed to Greece having managed to repay €200 million to the International Monetary Fund (IMF) on time. Additional Euro gains can be linked to improved services growth in many Eurozone economies.
The South African Rand, meanwhile, declined versus nearly all of its major peers after consumer confidence dived significantly. Additional losses are as a result of continued issues with Eskom as they prepare rolling blackouts to cut up to 1,000 megawatts from the grid.
The Euro to South African Rand (EUR/ZAR) exchange rate is currently trending in the region of 13.5205.
Euro (EUR) Exchange Rate Gains as Greece Make IMF Repayment
The common currency appreciated significantly on Wednesday in response to Greece making a €200 million IMF repayment on time, especially given that expectation that they would default was already priced-in. With a much larger sum due on May 12th, however, many analysts expect the cash-strapped nation to default unless they can secure bailout funds on time.
Although Eurozone retail sales data failed to meet with forecast figures, positive services data from France, Spain and Italy overshadowed the disappointing data results. Chris Williamson, Chief Economist at Markit said; ‘The final PMI data for April came in slightly stronger than the preliminary flash readings, notably for France, suggesting that the Eurozone economy more or less maintained the same growth momentum seen in March. The survey is signalling a rate of economic growth of approximately 0.4% at the start of the second quarter, similar to that indicated by the PMI in the first quarter. The fact that the rate of growth failed to gain further momentum is a disappointment, but the national growth variations will give policymakers some real encouragement that the economic health of the region is improving.’
The Euro to South African Rand (EUR/ZAR) exchange rate has fallen to a low of 13.3747 today.
South African Rand (ZAR) Exchange Rate Dives as Eskom Prepare More Blackouts
The Rand depreciated versus the majority of its most traded currency competitors on Wednesday after domestic data failed to impress. Consumer Confidence dropped from 0 to -4 in the first quarter. The fall in confidence is largely the result of Eskom load-shedding. ‘With the escalation of load shedding, consumers have understandably become more negative about South Africa’s economic prospects,’ said Sizwe Nxedlana, chief economist at FNB.
Eskom stated that they expect more rolling power cuts on Wednesday. The long period of load shedding has been extremely costly for South Africa’s economic growth. The problems for the energy company mount as workers continue to strike which is delaying work on the Medupi power station. ‘The continued unprotected industrial action is in its sixth week and has resulted in construction delays on the Medupi Power Station Project. However, work being carried out on Unit 6 has continued successfully,’ said the utility.
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 Eskom planning more rolling blackouts, the Euro to South African Rand (EUR/ZAR) exchange rate is likely to hold gains for the remainder of Wednesday’s European session.
Thursday’s European session could see heightened EUR/ZAR volatility with German Factory Orders and Construction PMI due for publication.
The Euro to South African Rand (EUR/ZAR) exchange rate reached a high of 13.5657 today.