SAFXC reviews FX market, Jibar-ZARONIA shift, digital currency
The South African Foreign Exchange Committee (SAFXC) discussed domestic foreign exchange market conditions, the transition from Jibar to ZARONIA, and the implications of digital currencies at its meeting on April 7, 2026. The committee also reviewed feedback on the FX Global Code and liquidity challenges.
Rand resilience amid geopolitical shocks
The South African Foreign Exchange Committee (SAFXC) reviewed domestic foreign exchange (FX) market conditions, noting the rand's resilience despite heightened volatility and external shocks, particularly from geopolitical developments.
FX volatility remained measured and orderly compared to interest rate and commodity markets.
Trading behaviour showed three phases: rapid unwinding by short-term investors, algorithmic trading driven by headlines, and substantive trading.
Concerns about exogenous FX shocks underscored the need to monitor local currency vulnerabilities and provide market guidance.
The transition from Jibar to ZARONIA was a key discussion, with the 'no new Jibar' milestone set for May 1, 2026, and Jibar's official discontinuation on December 31, 2026.
The SARB highlighted market complacency and stressed the need for outreach, systematic monitoring of exposures, and coordination with international regulators to manage offshore exposures effectively.
Participants were encouraged to adopt the ISDA fallback protocol and prioritise ZARONIA in pricing and risk management.
FX derivatives liquidity and committee evolution
SAFXC members discussed persistent FX derivatives market liquidity challenges.
Banks provided liquidity in the reported market, facing regulatory restrictions and API integration issues that reduced central order book transparency.
OTC trades by major buy-side participants further diminished visibility.
The committee urged caution against unrestricted non-bank access and emphasised FX Global Code compliance to reduce reputational risk.
Discussions with Tier-1 banks on data access and solutions will continue.
Furthermore, the SAFXC reviewed its terms of reference, benchmarking against other central banks.
It proposed expanding membership to include Tier-1 banks and selected buy-side institutions to enhance discussions and align with international best practice.
The SARB will circulate a revised version of the terms for feedback, noting ongoing work to establish a public register.
Digital currencies: limited adoption, growing focus
The SAFXC discussed the potential implications of stablecoins and central bank digital currencies (CBDCs) for FX markets, noting their still-limited adoption and associated interoperability, capital risk, and regulatory challenges.
Feedback from the GFXC meeting reinforced these themes, highlighting a new working group focused on AI, stablecoins, and CBDCs.
This signals a growing recognition of digital currencies' future impact, necessitating renewed engagement with the FX Global Code and proactive regulatory attention.