This year has been marked by significant geopolitical instability. As the conflict in the Middle East continues, South African importers are being squeezed from three sides. Fuel costs are up. Supply chains are broken. And the rand, already one of the world’s most volatile emerging market currencies, now carries a war premium on every international transaction.
These costs are hitting the bottom line. To mitigate the impact, businesses need to lock in their currency exposure and review their contract terms.
Defending the rand
In a global risk-off environment, the rand often serves as a proxy for emerging market sentiment. When regional conflicts intensify, investors flee to safe-haven currencies, leaving the rand vulnerable to sudden, sharp devaluations.
For businesses with international invoices, this volatility is a silent margin-killer. If the rand devalues between the time an order is placed and the time it is settled, the actual cost of goods can skyrocket, turning a profitable deal into a loss.
“A contract is only as stable as the currency used to pay it,” says Harry Scherzer, CEO at Future Forex. “For South African businesses, the triple threat isn’t just the price of the goods or the fuel to ship them; it’s the risk that the rand devalues by 10% between the time an order is placed and the time the invoice is settled.”
To mitigate this, Future Forex advises utilising forward exchange contracts to lock in exchange rates for future transactions. “By doing so, you effectively fix your margins. Even if the conflict escalates and the rand weakens further, your costs remain at the pre-agreed level, ensuring that global uncertainty doesn’t translate into domestic insolvency,” says Scherzer.
Financial pain isn’t force majeure
While currency volatility creates financial pain, the physical disruption of trade routes and surging logistics costs are causing many businesses to reconsider their commercial agreements. However, exiting a contract due to geopolitical shock is legally more complex than many realise.
“The escalating volatility in the Middle East has created a perfect storm for importers, where fluctuating exchange rates and surging fuel costs collide. When geopolitical shocks disrupt the economic basis of a deal, the first instinct is often to look toward force majeure clauses but in reality, the legal threshold for impossibility of performance is high,” says Andre van den Berg, Director, Banking and Finance at CMS South Africa.
“It is worth noting that commercial onerousness – where a contract becomes significantly more expensive or less profitable – rarely constitutes a force majeure event under South African law, or indeed in many international jurisdictions.”
To successfully trigger force majeure, performance in terms of a contract by the party seeking to rely on it must be objectively impossible – not just financially painful, adds Van den Berg.
“Rather than focusing on exiting contracts, businesses should look at renegotiating, where possible. Check for ‘hardship’ or ‘material adverse change’ (MAC) provisions, which may be used by a party to trigger negotiations when the economics of a contract are fundamentally upended.
“Consider moving away from fixed-price models and rather implement indexed pricing that accounts for fuel and other cost fluctuations and currency volatility, as this can distribute risk more equitably. Similarly, review delivery obligations. If specific trade routes are blocked, ensure your contract allows for alternative routing without being considered a breach of the ‘time is of the essence’ clause.”
Don’t wait for the bill
The lesson of 2026 is that reactive management is a failing strategy. Businesses that wait for the invoice to arrive before addressing currency risk, or wait for a supply chain break before reviewing their legal fine print, are leaving their survival to chance.
By combining the financial foresight of forward contracts with the legal agility of resilient contract structures, South African firms can build a fortress around their margins. In the current world of escalating regional conflict, the goal is simple: ensure that the next geopolitical shock is a headline you read, not a crisis you fund.
The bottom line? Lock in your costs and review your clauses now – before the next escalation drives the price of delay even higher.