EUR to ZAR Exchange Rate Volatile Amid Geo-Political Tensions; ECB Meeting Thursday
The Euro (EUR) is presently trading against the South African Rand (ZAR) at 14.3159 following a period of volatility for both currencies. Monday has seen session highs of 14.3548 whilst falling to lows of 14.2738.
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The currency market is presently trading in between geopolitical tensions regarding Russia and Ukraine following the downing of a Malaysian Airlines passenger plane.
The Eurozone published Investor Confidence figures on Monday which fell further than expected, attaining only 2.7 in August despite forecasts of 9.0. Conversely, the Eurozone Producer Price Index rose by 0.1% in June, bypassing forecasts of 0.0% showing the first rise in 2014.
The Euro however is hovering only 0.4% away from an eight month low in anticipation of the European Central Bank’s (ECB) Thursday meeting.
The ECB are due to discuss the Bank Rate Decision, alongside the Deposit Facility Rate and Marginal Lending Facility.
The ECB has, in recent months, cut interest rates in an attempt to encourage inflation. However economists predict that the ECB will need to further their unorthodox measures in an attempt to boost the Eurozone recovery.
Expert in the field Valentin Marinov commented: ‘The downside risk for the Euro persists, and our view is that the currency has further to go. The Euro weakness was driven mostly by the ECB’s policy and we expect more from the central bank. Their task is far from done.’
Conversely the Rand has experienced volatility in 2014 following strikes that have dominated the economy. Although last week signalled the end of the National Union of Metalworkers of South Africa (NUMSA) strike, the work stoppage hasn’t concluded as smoothly as some had hoped.
The National Employers Association of South Africa (NEASA) has locked out NUMSA members attempting to return to work. Despite NUMSA signing contracts to agree to a 10% raise, NEASA are only willing to offer 7%.
The Rand however can now look to gain some stability following seven months of severe volatility.
Industry expert Anisha Arora stated: ‘The end of numerous strikes and wage disputes, as well as recent (rate) hike action from the South African Reserve Bank may offer the Rand some insulation from the external geopolitical tensions and pressures between the West and Russia.’
For now the EUR to ZAR exchange rate is likely to remain firm in the currency market, however with the ECB meeting held on Thursday, the Euro will be subject to great fluctuation against other majors.
The South African Rand to Euro exchange rate currently resides at 0.0697.