SA’s gross gold and foreign-exchange reserves reached a record high in December, a welcome outcome that will help to buffer the balance of payments and maintain the confidence of financial markets.
Bank data released on Monday shows gross foreign-exchange reserves increased to $62.5bn in December 2023, up from $61.72bn in the previous month.
Foreign-exchange reserves are used to back foreign currency liabilities. They are held by a country’s monetary authority (in gold and foreign currencies) to buffer the balance of payments and are primarily available to balance payments and maintain confidence in financial markets.
In a statement, the Reserve Bank said the increase was driven by foreign currency reserves, rising to $47.9bn from $47.25bn in November, gold reserves to $8.34bn from $8.21bn previously, as well as an increase in special drawings rights to $6.29bn from $6.25bn.
Monday’s data comes amid calls by civil organisations and some in the market for the Treasury to use the unrealised profits on SA's gold and foreign-exchange reserves, housed in the Gold and Foreign Currency Contingency Reserve Account (GFECRA), to alleviate its fiscal challenges
The Treasury has since begun working with the Reserve Bank on the gold and foreign-exchange contingency reserve account for a way forward.
Correction: January 8 2024
The story has been amended to reflect that the Reserve Bank does not intervene in the exchange rate, and that the GFECRA is not part of the reserves themselves.
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