Nedbank: SA Reserves

07 Sep.

Nedbank Economic Commentary: Reserves – August 2011.

Higher gold price boosts the international liquidity position.

• The international liquidity position rose by $1 251 million to $49 125 million in August, the third consecutive month of improvement.
• The improvement in both gross reserves and the liquidity position was largely due to a stronger gold price as well as some depreciation in the US dollar against other major currencies, which helped the rise in foreign exchange holdings.
• There was a slight decline in the forward position after a strong buildup since April this year.
• Gross reserves are now sufficient to cover around 6,8 months of imports, the highest figure since July 2010.
• The figures suggest that the Reserve Bank continues to purchase foreign exchange to alleviate upward pressure on the rand. This strategy is likely to continue, although in recent days the rand has come under some pressure, in line with most peer currencies.
• These figures have little direct implication for monetary policy. We expect interest rates to remain unchanged until the second half of 2012.

Comment

The international liquidity position rose by $1 251 million to $49 125 million in August, boosted mainly by the higher value of gold holdings, while the value of foreign exchange holdings rose on the weaker US dollar. The value of gold reserves rose by $843 million to $7 341 million as the gold price increased to $1 826,95 per ounce from $1 617,16 in July.

The US dollar fell to $1,4434 against the euro from $1,4246 and to $1,6308 against the British pound from $1,6279. The rand was softer at R7,0375 against the US dollar from R6,7326….

See the full Commentary

Also see the SA Reserve Bank Information Notice