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Euro to South African Rand Exchange Rate Forecast: EUR/ZAR Softens as Mining Production Soars in Africa’s Most Advanced Economy

Euro Exchange Rates

The Euro to South African Rand (EUR/ZAR) exchange rate softened by 0.33% on Thursday afternoon due to the release of positive domestic data out of South Africa and as the publication of more poor data out of the USA supported emerging market currencies.

The Euro to South African Rand (EUR/ZAR) Exchange Rate Touched a Session Low Of 13.4261

Earlier in the session, the Euro had been trading higher against the Rand and other emerging market currencies as it was supported by a boost in European government bond yields and positive Eurozone gross domestic product (GDP) data released on Wednesday.

As the session progressed, the Euro softened against the South African Rand as domestic data out of South Africa showed that mining production continued to recover. The report released by Statistics South Africa showed that production rallied in March by a huge 18.8% on an annual basis. Month-on-month, production increased by 7.1%, a solid rise from the revised 4% recorded in February. Quarterly production was up by 1.9%.

The report also showed that platinum, a major South African export, could reach the $1,000 per ounce level by the end of this year, a figure not seen since early 2009. Platinum Group Metals (PGM) were shown to have risen 132% from last March, the month, which saw the worst of the strike action in the platinum mining sector.

‘The high annual growth rate in PGM production in March 2015 (132.2%) was partly the result of a low base in March 2014, when the PGM sector was adversely affected by industrial action. Manganese ore production was up 17.3%, while nickel rose 15%,’ said Statistics South Africa.

Poor US Data and Gold Price Rise Supports South African Rand

The South African Rand was also supported by gold prices rising to the best level for five-weeks as the US Dollar remained under pressure following the release of more disappointing data.

Spot gold rose to the highest since April 6 at $1,219.70 an ounce and was trading up 0.3% at $1,218.05/oz. The commodity’s value increased by 2% following the release of weaker-than-forecast US retail sales data released on Wednesday.

‘I’m forecasting gold to average $1,200 this quarter, as a slightly weaker Dollar will continue to be supportive until we see some stronger data points. Only a rebound in US employment data will start triggering talks about an imminent interest rate hike again because now expectations have been dampened,’ said David Wilson, a strategist from Citigroup.

The Rand is likely to maintain gains as disappointing US producer price and jobless claims data is set to increase concerns that the Federal Reserve will not hike interest rates until the end of the year. The possibility of a delayed rate hike is supporting emerging market and commodity based assets.