Rand steadies as South Africa’s FATF greylist exit boosts investor confidence

The rand held relatively steady over the past week, buoyed by South Africa’s long-anticipated removal from the Financial Action Task Force (FATF) greylist — a development widely seen as a vote of confidence in the country’s financial reforms.

The local currency traded in a narrow range, hovering around R17.30 to the US dollar, after fluctuating between R17.22 to the US dollar on Monday, R17.46/$1 midweek, and closing at R17.26/$1 on Friday.

The movement mirrored broader volatility in the US dollar index, though the FATF announcement helped anchor sentiment in South Africa’s favour.

FATF confirmed on Friday that South Africa “will no longer be subject to increased monitoring”, acknowledging that the country had successfully completed its reform commitments within the agreed timeframe.

However, the Treasury cautioned that delisting marks “the start of a broader process” rather than its conclusion, emphasising the need to sustain institutional reforms, strengthen enforcement, and deepen governance improvements.

Bradley Elliott, CEO of regulatory technology firm RelyComply, said the outcome highlights the power of coordinated effort and strategic focus in tackling compliance challenges.

“The delisting shows that when South Africa acts in unison, meaningful reform follows,” Elliott said. “But the next test lies in embedding a permanent culture of accountability and resilience. Adding regulation is easy — embedding compliance into culture is hard. True resilience comes from anticipating risks, not just reacting when they occur.”

Elliott warned that without continuous vigilance, institutions risk “slipping back into old habits once the spotlight fades.” He called for ongoing public-private collaboration to maintain and enhance the country’s anti-money laundering (AML) and counter-financing of terrorism (CFT) frameworks.

The FATF removal of South Africa from the grey list also gives a boost to National Treasury to table a confidence-boosting Medium-Term Budget Policy Statement (MTBPS) next month after the February Budget experienced unprecedented delays. 

Maarten Ackerman, chief economist at Citadel, said the MTBPS will also come at a pivotal moment for SA’s international credibility, potentially coinciding with the country’s delisting from the FATFgrey list, an outcome that could support foreign inflows and boost investor sentiment.

Ackerman said he expected Treasury to maintain a disciplined fiscal stance while adopting a cautiously optimistic tone.

“Although growth has improved slightly, both the fiscal deficit and debt-to-GDP ratio remain elevated. National Treasury’s revised revenue and growth assumptions will likely reflect optimism that may not fully align with the realities of global and domestic headwinds,” he said.

Citadel forecasts sub-1% growth for 2025, improving modestly to between 1% and 1.5% in 2026.

Louise Usher, head of Credo, welcomed the delisting as a milestone for South Africa’s financial credibility.

“This is a positive and encouraging development that reflects sustained progress in aligning with global AML and CFT standards,” she said. “For firms operating across multiple jurisdictions, effective compliance frameworks are not just regulatory expectations — they’re fundamental to integrity, transparency and trust.”

Usher added that the FATF’s decision would reduce friction in cross-border financial transactions, boost investor confidence, and enhance perceptions of South Africa’s financial stability.

“Meeting and sustaining global standards of compliance is essential for long-term credibility,” she said. “The FATF’s announcement recognises South Africa’s commitment to building a secure, transparent and responsible financial system.”

Vincent Gaudel, financial crime compliance expert at LexisNexis Risk Solutions, echoed those sentiments, describing the FATF’s decision as a recognition of “significant progress” made by both government and private sector institutions.

“Risks don’t end with removal from the greylist,” Gaudel warned. “Authorities should use this strengthened framework to investigate, prosecute, and confiscate criminal proceeds for the benefit of the country. Demonstrating tangible results against financial crime will be crucial ahead of FATF’s next evaluation in April 2027.”

Analysts agree that while the delisting provides a welcome boost to sentiment — and potentially to the rand — maintaining momentum will depend on consistent enforcement, institutional cooperation, and cultural transformation within South Africa’s financial system.

As Treasury officials noted, the challenge now is ensuring that the reforms which restored global confidence remain deeply entrenched — transforming temporary compliance into lasting integrity.

BUSINESS REPORT