South Africa’s foreign exchange reserves narrowed in July, reaching more than four-and-a-half year low levels, as the US dollar strengthened during the month, while gold prices fell, central bank data showed.
The gross gold and foreign exchange reserves shrank 2.1% m/m to $45.8bn, their lowest level since January 2011, following a 0.8% m/m growth in June. The South African Reserve Bank (SARB) attributed the decline to the appreciation of the dollar against major currencies, the fall in the dollar gold price and an increase in foreign exchange swaps conducted for liquidity management services.
South Africa’s international liquidity position (ILP), which represents its net forex reserves, fell 1.4% m/m to $41bn at end-July, the worst reading since September 2010, reversing a 0.2% m/m rise in June. The decrease was caused mainly by the drop in gross reserves, partly offset by a 2.2% fall in the received foreign currency deposits and an 11.1% increase in the forward position, which represents SARB’s unsettled spot or swap transactions.
The y/y drop in gross reserves deepened to 8.2% last month from 3.7% in June, and that in net reserves widened to 7.5% from 7.2%.
| $mn | Jul-15 | Jun-15 | m/m change |
| Gold reserves | 4 370 | 4 718 | -7.4% |
| SDR holdings | 2 494 | 2 515 | -0.8% |
| Foreign exchange reserves | 38 959 | 39 597 | -1.6% |
| Gross reserves | 45 823 | 46 829 | -2.1% |
| Foreign currency deposits received | -7 368 | -7 537 | -2.2% |
| Forward position | 2 553 | 2 298 | 11.1% |
| International liquidity position | 41 007 | 41 590 | -1.4% |
| Source: SARB |
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