FATF knocks the Rand

The buzzword over the weekend had to be ‘greylisted’ after the news broke that South Africa did not meet the Financial Action Task Force (FATF) standards and was placed under grey listing status.

The FATF identifies jurisdictions with weak measures to combat money laundering and terrorist financing, and South Africa has now been placed under increased monitoring.

Although the SA’s National Treasury did expect the Paris-based FATF to place the country under increased scrutiny by adding it along with Nigeria to its greylist, the National Treasury, however, expects it will have little impact on the country’s financial stability and the costs of doing business with South Africa.

NewWave USD Currency ETN (JSE: NEWUSD)

However, the local currency did not take the announcement lightly, and we saw Rand (ZAR) depreciate over one per cent on the day, reaching a low of R18.48 against the Dollar (USD). Luckily, it’s not all doom and gloom for investors as the NewWave USD Currency ETN (JSE: NEWUSD) has followed suit, acting as a hedge against uncertainty.

Looking at the fundamental and global macroeconomic picture, we could possibly expect the South African Rand (ZAR) to depreciate further against the US Dollar (USD). After disappointing inflation and retail sales data, the US Fed meeting minutes affirmed market participants’ fears that the rate hiking cycle would continue longer than expected.

This could boast well for NewWave USD Currency ETN investors looking to hedge some risk by investing in the ETN in anticipation that the Rand could potentially depreciate further.

Looking at the price action of the NEWUSD ETN, we can see that price has reached resistance at R18.50, which will be watched closely. If uncertainty prevails, then we could potentially see the price move higher to R19.00 and back to COVID-19 levels around R19.20 a share level. 


The price action on the NEWUSD ETN could provide investors with further opportunities if the price action breaks the R18.50 resistance level and moves higher as fear sets in. If this does not pass, then we could potentially see the ETN retrace back to R18.00 a share.

Sources: Koyfin, IOL, TradingView.

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