06 Aug.
Nedbank Economic Commentary: Reserves.
International liquidity improves further on higher gold price and Reserve Bank activity.
- The international liquidity position improved further to $47 874 million in July from $47 162 million in June, reflecting mainly the rise in the value of gold holdings and more activity by the Bank in the forward market.
- Gold reserves rose strongly, boosted by a jump in the international gold price during the month. This boosted the value of gross reserves despite the drop in foreign exchange reserves holdings.
- The Reserve Bank is likely to continue to accumulate foreign exchange reserves during times of rand appreciation.
- These figures have little direct implication for monetary policy. We expect interest rates to remain unchanged until early 2012.
Comment
The international liquidity position improved further during the month, boosted mainly by the higher value of gold holdings and the increase in the forward position.
The value of gold reserves rose by $438 million to $6 498 million on the back of a jump in the gold price during the month, which increased by more than $108,94 per ounce to $1 617,16.
The forward position increased further during the month, with the Reserve Bank attributing this to “outstanding foreign exchange forward transactions”. Last month the Bank indicated that it had swapped FDI-related inflows, probably from the Walmart/Massmart deal, into the forward market. …
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