The levels of development, sophistication and depth of our financial markets have allowed South Africa to weather the turbulence of the past year reasonably well. However, we have to acknowledge that there are still some risks in the system, even if they are difficult to quantify.
Bond yields are low relative to the averages of the past decade, and the nonresident share of government bond holdings remains very high by historical standards. Carry trade activity, which seemed to support the domestic bond market in May, is by its own nature a temporary phenomenon, even though its timing is unpredictable.