South Africa has a well-regulated and capitalised banking system that has been largely unaffected by the United States subprime crisis, the South African Reserve Bank reiterated on Tuesday.
The Reserve Bank has maintained that turmoil in global financial markets that started last year has only affected South Africa indirectly, as local banks had almost no direct exposure to US subprime mortgages.
”South Africa has a well regulated banking system, well-capitalised … and largely unaffected by contagion arising from the financial market turmoil, which started in the subprime market of the United States … last year,” Reserve Bank Deputy Governor Xolile Guma said on Tuesday.
”The effects of this turmoil in international financial markets, so far, have been indirect … They have been felt primarily in the form of volatility in the domestic financial markets and in the form of increased pricing for off-shore funding,” Guma said in a speech at a banking conference.
Analysts say South Africa wide current-account deficit has rendered the rand currency particularly vulnerable to swings in investor sentiment as the ongoing turmoil has left investors wary of high-yielding but riskier assets. — Reuters