SA increases its reserves in foreign assets

THE South African Reserve Bank’s dollar-denominated holdings of gold and foreign assets rose by $239-million to $49.587-billion last month from $49.348-billion in November‚ data released by the bank yesterday showed.

Foreign exchange reserves were up $429-million to $42.008-billion last month from $41.579-billion in November‚ while gold reserves declined $199- million to $4.825-billion from $5.024-billion in November. The international liquidity position rose by $49-million to $45.479-billion from $45.430-billion the month before.

Nedbank economist Johannes Khosa said general economic conditions were still challenging and the bank’s ability to accumulate reserves would also depend on the developments in market conditions. “The rand remains vulnerable and capital inflows into emerging markets are likely to be affected by the US Fed’s decision to reduce its monetary stimulus programme from this month.

“The bank will be contained in its ability to accumulate reserves aggressively in the short term.”

The bank said the increase in the gross reserves mainly reflected the depreciation of the US dollar against major currencies‚ foreign-exchange swaps conducted for liquidity management purposes and foreign-exchange transactions concluded on behalf of clients. These transactions were partially offset by the decline in the US dollar gold price.

The increase in the international liquidity position reflected changes in the gross reserves and the foreign currency deposits received‚ which was substantially offset by the decline in the forward position.

Investec economist Kamilla Kaplan said the dollar had weakened against the pound and euro during the month. “The re-evaluation accounted for approximately $0.16-billion of the total $0.43-billion in the foreign exchange position.”

The balance of the change had been attributed to foreign-exchange transactions conducted on behalf of clients and to moderate reserve building.

The value of foreign exchanges increased‚ causing a moderate rise in gross reserves‚ which was partially offset by the decline in gold reserves. – BDlive