Homepage » News » EUR/ZAR » EUR/ZAR Exchange Rate Weaker, GBP/ZAR Exchange Rate Higher on Risk Aversion

EUR/ZAR Exchange Rate Weaker, GBP/ZAR Exchange Rate Higher on Risk Aversion

Euro Exchange Rates

The South African Rand (ZAR) to Pound Sterling (GBP) exchange rate weakened by more than 0.30% on Monday as investors safe haven assets and as a manufacturing report showed that activity in the sector contracted for a fifth consecutive month.

Demand for riskier emerging market currencies declined on increasing concerns that the European Union will introduce new harsher sanctions against the Russian Federation.

As a result, the Rand declined sharply against most major peers as trader-sought shelter in safe haven assets.

Ukrainian forces had in recent weeks being closing in on achieving a military victory against pro Russian separatists in the east of the country.

That all changed last week after Russian forces aided the rebels and pushed back government forces. Rebels are now launching offensives in the south and are advancing on a number of coastal towns.

In retaliation, European leaders threatened Russia with new stricter sanctions with some leaders saying that Ukraine was close to crossing the tipping point into open war with Russia; others said that Russia was at war with Europe.

Also weighing upon the South African Rand was the release of data which showed that activity in South Africa’s manufacturing sector improved slightly last month but remained in contraction territory for a fifth month straight.

The Kagiso Purchasing Managers Index (PMI) climbed by 3.1 index points to 49, up from the 45.9 recorded in the previous month. The cause for the uptick was because of striking workers returning to their jobs.

Any figure above 50 indicates expansion whilst a number below indicates contraction.

‘The below 50 reading suggests that conditions in the factory sector are still relatively subdued. While demand in the broader economy remains weak, the slow return of to normal production levels in the platinum mining and metal sectors likely supported the improvement in new sales orders and business activity levels,’ said Abdul Davids, head of research at Kagiso Asset Management.

The continuing divergence of the PMI figure compared to the USA, Eurozone and China has weighed upon sentiment towards the Rand.

Pound Sterling to South African Rand Exchange Rate Forecast

Sterling could make further gains against the South African Rand on Tuesday if the latest UK Construction PMI and Business Investment data come in positively. A further escalation in the conflict in Ukraine is also likely to soften the Rand further as risk aversion will remain high.

South African Rand (ZAR) Exchange Rates

[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,,South African Rand,17.7290 ,
Euro,,South African Rand,14.0191 ,
US Dollar,,South African Rand,10.6737 ,
Australian Dollar,,South African Rand,9.9711 ,

As of 16:40 pm GMT