After a relatively benign second quarter, risks escalated during the third quarter. China’s regulatory tightening turned even more aggressive, while last year’s “three red-lines” for developers came home to roost in the threat of an Evergrande default. The US debt ceiling deadline loomed increasingly large, while the Fed moved the dot plot higher and confirmed a more rapid pace of tapering in the September FOMC meeting.
South Africa’s exchange control regime has relaxed considerably over the last few years, but the most recent amendments have created widespread confusion around the definition of non-residency for exchange control purposes. In particular: When is a person non-resident for exchange control in South Africa? How do they cease to be resident for exchange control purposes? And what does all this mean?
In light of recent developments on the sides of both the South Africa Revenue Service (SARS) and the South African Reserve Bank (SARB), the regulatory burden for the cross-border flow of funds, resulting from transactions concluded between South African residents and foreign parties, has been significantly eased.
The concept of “emigration”, as recognised by the Financial Surveillance Department of the South African Reserve Bank (SARB), has been phased out, with effect 1 March 2021. National Treasury has indicated that the reason for this regulatory change is “to encourage South Africans to keep their ties with the country”.
Central bank policymaking in the age of Covid was initially straightforward. Central banks acted in unison to cut rates, and many also injected substantial amounts of liquidity into their financial systems. The world saw synchronised easing in response to an unprecedented crisis.
The SARB Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 3.5% in a unanimous decision. This outcome was in line with the consensus survey expectations, as well as the market prices. As such, there was minimal impact on bond yields, the rand, and equities. The FRA (forward rate agreement) curve steepened slightly as the SARB’s repo rate model projected a slightly higher profile over the longer term.
Visit the official COVID-19 government website to stay informed: sacoronavirus.co.za