Foreign investors are withdrawing money from South African assets as the Middle East war triggers a global flight to safety, increasing pressure on the rand and exposing Africa’s biggest economy to heightened financial market volatility.
In its half-year financial stability review report, released last week, the South African Reserve Bank (SARB) warned that the country’s vulnerability to volatile capital flows has increased as non-resident investors sell domestic assets and shift funds toward traditional safe-haven markets.
The central bank said geopolitical tensions stemming from the conflict that erupted on February 28 have amplified existing economic vulnerabilities by driving up oil prices, tightening global financial conditions, increasing market volatility and weakening the global growth outlook.
“Vulnerability to volatile capital flows has increased as non-resident investors sell domestic assets in search of safe havens, contributing to greater rand volatility,” the SARB said.
South Africa’s financial conditions have tightened since the previous review, reflecting higher equity market volatility, exchange-rate pressures and a broad repricing of risk by global investors. Although overall conditions remain close to historical averages, the Reserve Bank said a more uncertain external environment is likely to continue testing the resilience of the financial system through the remainder of 2026.
