Foreign exchange reserves in SA edged up to $58.16bn in March from $57.69bn in February, the largest foreign exchange reserves since last August.
Foreign exchange reserves are held by a country’s monetary authority and are primarily available to balance payments, influence the foreign exchange rate of its currency, and to maintain confidence in financial markets.
The Reserve Bank said in a statement that the rise in foreign exchange reserves was due mainly to a loan of $750m from the World Bank.
The Bank said the effect of the World Bank inflows were partially offset by foreign exchange payments made on behalf of government as well as the appreciation of the US dollar against other currencies. The increase in the US dollar-gold price also contributed to the increase in the gross reserves, the Bank said.
The rise in foreign exchange reserves was in line with market expectations. Nedbank economist Tachin Ramnath said the increase in the US dollar-gold price contributed to the increase in the gross reserves.
“The increase in foreign reserves was also driven by soft growth in foreign exchange reserves of 0.5% month on month and a rise in gold reserves,” said Ramnath.
Ramnath said the increase in gold reserves reflects higher valuation adjustments as the market gold price rose 1.4% during the month, benefiting from its “safe haven” status and a rise in commodity prices due to the Russia/Ukraine conflict.
Ramnath said the move will lift the international liquidity position to $55.9bn from $55.5bn .
“The level of reserves import cover is forecast to have increased slightly to around eight months in February as the rand firmed, gaining 6.4% month on month against the US dollar, while import volumes continued to improve due to higher consumer spending and some recovery in fixed investment activity,” said Ramnath.
FNB chief economist Mamello Matikinca-Ngwenya said a stronger dollar-denominated gold price and weaker dollar contributed to the increase in reserves and was only partially mitigated by payments made on behalf of government.
ZwaneT@businesslive.co.za
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