Market Unrest from US President’s Comments Brings EUR/ZAR Exchange Rate Losses
The Euro (EUR) has fallen by -0.4% against the South African Rand (ZAR) today, trading at a level of ZA16.6187.
This decline in the EUR/ZAR exchange rate has been caused by external developments, namely comments made by US President Donald Trump.
Mr Trump has made headlines by criticising the US central bank, the Federal Reserve, for raising interest rates.
These remarks have weakened the US Dollar and raised demand for other global currencies, namely the Euro and the Rand.
Demand for the Rand has increased above demand for the Euro, although the single currency has still made gains elsewhere.
If the US Dollar weakens then traders can buy ‘safer’ currencies like the Euro; in this case, risk sentiment has prevailed and made the Rand more valuable.
Muted Optimism from Greek Bailout Exit Limits Euro (EUR) Demand Today
There has been limited data to influence the EUR/ZAR exchange rate today; the news that Greece has exited from its bailout program hasn’t inspired Euro traders.
Greece was hit especially hard in the late 2000’s financial crisis and required billions of Euros of loans from Eurozone members to manage its vast debts.
The most negative aspect of the bailout exit news is the fact that the Greek economy is still in a precarious position.
The national unemployment rate remains above 18%, GDP growth is a shadow of its former self and a high tax burden continues to weigh on the Greek population.
Economists aren’t currently forecasting a return to the Greek debt crisis, but the sentiment in Athens is that the journey to economic stability is far from over.
South African Rand to Euro (ZAR/EUR) Exchange Rate Rises on USD Drop, Trade Talk Optimism
The main factor pushing up demand for the South African Rand (ZAR) today has been the weakening of the US Dollar.
Outside of USD weakness, background support for the Rand to Euro (ZAR/EUR) exchange rate has also come from last week’s trading news.
It is reported that US and Chinese trade officials will be meeting later in August to discuss a potential de-escalation of the ongoing trade dispute.
This would have a positive effect for the South African economy, as it would reduce global economic uncertainty and might lead to continued ease of trading.
Euro to South African Rand Exchange Rate Forecast: Will Higher ZA Inflation Bring Greater EUR/ZAR Losses?
The Euro’s (EUR) recent losses against the South African Rand (ZAR) could extend in the near-term, when ZA inflation rate data comes out on Wednesday.
The morning’s figures for July are forecast to show a faster pace of price growth in South Africa, which could raise hopes for another interest rate hike.
The top end of the South African Reserve Bank’s inflation target range is 6% and base annual inflation is expected to rise from 4.6% to 5%.