Rand Comes Under Pressure Amid Signals That S. Africa Could Be Added To FATF Gray List

The Rand has gone offered as South Africa's tax service chief Kieswetter appeared to preannounce the imminent graylisting of the country by a global money laundering watchdog FATF, with the formal announcement not due until late afternoon.

• If confirmed, a graylisting by the FATF would expose South Africa to capital outflows and reputational damage, adding to the slew of downside economic risks faced by the continent's most industrialised nation.
• Spot USD/ZAR now deals at ZAR18.3511, up ~1,300 pips on the day, having lodged an intraday high at ZAR18.3526. A break above Feb 22 high of ZAR18.3851 would turn focus to the area above ZAR18.5000, where the rate charted a triple top last autumn.
• Local-currency bonds have rallied and last trade 5.8-7.7bp richer across the curve. South Africa's 10-year breakeven inflation rate has eased to 6.14%, after printing the lowest levels this week.
• The BBG Commodity Index operates ~0.3% higher on the day, with the precious metals subindex little changed and gold trading flat.
• The FTSE/JSE Africa All Share Index has faltered from the off, retracing the bulk of yesterday's gains, albeit it struggles to challenge the nearby 50-DMA.