As it does not include the US Dollar, the EUR to ZAR pair is regarded as an exotic currency pair. In this trading instrument, the value of one Euro (EUR) is given in South African Rand (ZAR). It is often prone to volatility due to the many factors that can impact the EUR to ZAR rate. It does mean, however, that traders can capitalise on this pair’s profit-making potential.
ZAR first entered circulation in February 1961, just before South Africa became an independent republic. It replaced the South African Pound, which was aligned to the British Pound due to the country’s Dominion status within the British Empire. In its first two decades, the Rand traded at a value of US$1.40. But its value started to decline amid growing diplomatic pressure in 1982.
Even after the country emerged from political isolation in the early 1990s, the value of the Rand continued to depreciate on the global forex market. The weakening of the Rand saw its value go from R3 against USD in 1992 to a record R13.84 after the September 11, 2001 attacks. While it has since stabilised, the Rand remains prone to major volatility if trading the EUR to ZAR pair.
This volatility is what makes the Rand popular with forex investors, however. It is one of the 20 most-traded currencies, according to research from the Bank for International Settlements. The Euro, in contrast, has become a dominant force on the global market. It is now a major reserve currency and is the second largest by trading volume after the US Dollar.