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Euro to rand forecast: South African rand to start losing ground

By Debabrata Das

Edited by Alexandra Pankratyeva

17:14, 10 November 2021

Euro to rand forecast
Source: Shutterstock

What has been driving the EUR/ZAR pair’s rate in 2021 and what’s the euro to rand prediction as we head into 2022? In this article we look at the latest analysts’ EUR/ZAR forecasts and what to consider when trading the EUR against the South African rand.

EUR/ZAR price history chart

EUR/ZAR analysis: where is the pair now?

The South African rand is not a heavily traded currency, yet the euro to rand news has risen in prominence over the past year. It’s one of the best performing emerging-market currencies

From the beginning of this year to 26 October, the South African rand has strengthened by nearly 10% as the EUR/ZAR exchange rate fell from about 19.01 to 17.34.

According to Silicon Valley Bank’s chief currency strategist Steve Petruska, the rand benefitted from the reflation trade narrative, higher local interest rates and rising commodity prices in the early part of the year. 

The rand gained almost 14% between January and June as the EUR/ZAR rate fell to a 52-week low of 16.31 in early June. However, according to experts at South African lender Nedbank, over the past couple of months the currency has shed some of those gains with other emerging markets raising rates and commodity prices softening from record highs. 

Currently, the EUR/ZAR pair is trading range bound with minimal movements as traders wait for South Africa’s first Medium Term Budget Policy Statement to be released on 11 November. 

EUR/ZAR price rate year-to-date

EUR/ZAR technical analysis

Current market sentiment for the EUR/ZAR pair expects the rand to continue to lose some of the momentum it gathered early in the year. 

According to a recent report by Nedbank, the euro vs rand forecast is for a rise to 17.82 by the end of the year and to stay within the 17.6-17.7 range in 2022. A recent report by Dutch lender ING also forecast a similar range for the pair over the coming months. 

At the time of writing (10 November), data from shows trader sentiment at 86% bullish and 14% bearish. The data is calculated automatically, based on open positions for EUR/ZAR on the platform. It should not be considered an incentive to trade the asset.

Euro to rand forecast: key fundamental drivers

Being the currency of a resource-rich nation, the South African rand’s health is closely linked to global commodity prices. The currency is at its strongest when global commodity prices are high. 

The currency is also considered a carry trade currency because of its interest rates. In other words, it provides a high yield so that investors might buy ZAR and fund it with a lower yielding currency such as the EUR. 

The EUR closely tracks developments in the eurozone. It is also a key safe-haven currency, something investors might flock towards in response to signs of increased risk in the global economy. 


139.39 Price
+0.350% 1D Chg, %
Long position overnight fee 0.0104%
Short position overnight fee -0.0186%
Overnight fee time 21:00 (UTC)
Spread 0.010


0.67 Price
+0.200% 1D Chg, %
Long position overnight fee -0.0066%
Short position overnight fee -0.0016%
Overnight fee time 21:00 (UTC)
Spread 0.00006


1.08 Price
-0.040% 1D Chg, %
Long position overnight fee -0.0094%
Short position overnight fee 0.0012%
Overnight fee time 21:00 (UTC)
Spread 0.00006


1.26 Price
+0.040% 1D Chg, %
Long position overnight fee -0.0061%
Short position overnight fee -0.0021%
Overnight fee time 21:00 (UTC)
Spread 0.00013

In a risk-on environment, the ZAR does well, while the EUR does better in a risk-off environment. This is evident in the recent euro to rand exchange rate history, where the rand struggled during the Covid-19 pandemic. 

EUR/ZAR 5-year price performance

EUR/ZAR prediction: what are the analysts saying? 

Analysts’ EUR/ZAR predictions indicate that the South African rand is unlikely to appreciate much for at least another year. Although it benefited from higher commodity prices this year, an uncertain economic environment is keeping the currency in the 17.5-17.7 trading range. 

“Global risk appetites are likely to become more erratic as the world economy grapples with sticky inflation and supply shortages amid a mutating virus, divergent vaccination rates and a tricky transition to new energy sources. The pandemic also changed consumer preferences around work and consumption, adding more uncertainty to the inflation outlook and complicating policy choices in advanced and developing countries. Despite this, the US and other developed countries will normalise monetary policies, supporting the dollar and weighing on emerging market currencies. Some of these pressures are already visible in recent movements. Finally, commodity prospects also appear murkier as China faces more significant downside risks from the weakness in its property market and the drive to shift its economy towards higher value-added manufacturing and services. We, therefore, expect the rand to depreciate during the rest of this year, followed by more significant weakness in 2022,” analysts at Nedbank said in a report.

“Medium Term Budget Policy Statement (MTBPS) is expected to reflect significant improvements in the country's fiscal metrics. Tax revenue is expected to exceed February's budget estimates by a considerable margin, reflecting the stronger-than-expected economic recovery and the surge in mining profits on the back of the rally in global commodity prices. This, coupled with the significant upward revisions to nominal GDP followed by Stats SA's benchmarking and rebasing exercise, will result in smaller budget deficits for 2020-21 to 2023-34 than those reflected in February's National Budget. Altogether, gross government debt burden is forecast at around 68.7% for this fiscal year, substantially lower than 80.3% projected in February. Although comforting, the bulk of the improvement stems from temporary sources. Government cannot rely on volatile global commodity prices to stabilise its finances. Therefore, considerable expenditure restraint will still be required to return the budget deficit and public debt to a more sustainable path.”

Recent local election results also suggest that South Africa’s ruling party, the African National Congress (ANC), will find it hard to return to a path of fiscal consolidation. According to Capital Economics’ Africa economist Virag Forzis in a note dated 3 November 2021, the ANC’s poor showing “may strengthen the hand of factions within the party that want to push back against fiscal consolidation.

“It will certainly become harder for President Cyril Ramaphosa to strike a balance between shoring up voters’ support while reassuring investors about the poor state of South Africa’s public finances. As ANC leadership and national elections near (in late-2022 and 2024, respectively), we suspect that the authorities will increasingly lean towards watering down fiscal consolidation. As we’ve argued before, the path to stabilise the public debt-to-GDP ratio is likely to narrow… Policymaking in South Africa has already been slowed down by internal divisions within the ANC. With the prospect of gruelling coalition talks, agreeing on a united policy path will become even harder, let alone pushing through much-needed economic reforms.”

When looking for euro to rand forecasts, it’s important to bear in mind that analysts’ predictions can be wrong. Analysts’ projections are based on making a fundamental and technical study of the pair’s performance. However, past performance is not a guarantee of future results. 

Do your own research and always remember your decision to trade depends on your attitude to risk, your expertise in this market, the spread of your investment portfolio and how comfortable you feel about losing money. And never invest more than you can afford to lose.

Key facts about EUR/ZAR pair

The Euro (EUR) to South African rand (ZAR) exchange rate shows how many ZAR are needed to buy one EUR.

The ZAR or the South African rand, is the official currency of South Africa and also legal tender for the Common Monetary Area member states of Namibia, Lesotho and Eswatini. The rand is not a highly traded currency and has a share of just 1.09% of global forex transactions – which is commensurate with its gross domestic product (GDP) being the world’s 40th largest.

The euro is the official currency for 19 of the 27 European member countries. The currency was introduced in 2002, after a preparatory period of 40 years. The European Central bank and the European Commission are responsible for maintaining its value and stability.

It is the world’s second most-traded currency, accounting for 32.2% of all forex transactions, after the US dollar (USD). 


Is the rand getting stronger or weaker?

With commodity prices starting to moderate and the economic fundamentals weakening in South Africa, the rand is expected to be weaker over the remaining months of 2021 and through 2022, according to the expert views outlined above. Whether you buy or sell is your decision. Always remember that your decision to trade depends on your attitude to risk, conducting your own research and the spread of your investment portfolio.

What affects the euro to rand exchange rate?

The EUR/ZAR is affected by global commodity prices, the risk appetite among global investors, South African fiscal policy and the economic health of South Africa as well as the Eurozone.

What is the best time to trade EUR/ZAR?

While it is possible to trade EUR/ZAR 24/7, the best hours to trade the currency pair are when they experience higher volumes – typically around major market announcements. South Africa’s announcements are typically made during European market hours, when key policy decisions are announced in the eurozone.

Read more: Pound to dollar forecast: can the pair rebound back to 1.40?

Markets in this article

20.18879 USD
-0.11378 -0.560%
20.18879 USD
-0.11378 -0.560%
23.41065 USD
0.51813 +2.270%

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