Government bond yields are unusually high, with inflation-adjusted yields in the region of 4-5%. With the steepening of the yield curve, National Treasury has had to shorten the maturity of its debt to limit borrowing costs. However, this raises risks, as redemptions are not spread out over as long a period as previously. In addition, capital inflows to South Africa have declined.
Conclusion  In many ways, financial markets in emerging market and developing countries are still developing. The benefits that derivative markets offer and the challenges they bring, therefore, are not necessarily comparable with the benefits and challenges applicable to advanced countries. In addition, the benefits and challenges associated with derivative markets in specific countries may differ due to our markets’ differing stages of development.