In an environment where South Africa’s current account deficit remains elevated and is only expected to narrow gradually over the next two years, the risk of abrupt swings in portfolio flows into South Africa’s capital markets cannot be under-estimated.
Implications for South Africa of global financial developments The experience of the “taper tantrum”, as the episode which followed the first clear mention by the US Federal Reserve in May 2013, of the need to eventually wind down its open-ended asset purchases became to be known, illustrated the sensitivity of domestic financial markets to the global backdrop.