South Africa's gross gold and FX reserves recover in December, but net reserves keep shrinking

By bne IntelliNews January 8, 2015

South Africa’s gross gold and foreign exchange reserves returned to growth in December after declining for four consecutive months, but the country’s net forex reserves kept on shrinking and reached their lowest level since September 2010, central bank data showed.

The gross gold and foreign exchange reserves advanced 1.2% m/m to $49.1bn following a 0.3 m/m decrease in November. The South African Reserve Bank (SARB) attributed the increase to the maturing of foreign exchange swaps conducted for liquidity management purposes and higher gold prices, partly offset by the appreciation of the US dollar and by foreign payments made by the Treasury.

Among the components of gross reserves, foreign exchange reserves grew 1.3% m/m to $41.7bn at end-December (-0.4% m/m in November), gold reserves rose 1.3% m/m to $4.8bn (+1.4% m/m in November), while SDR holdings fell 1.1% m/m to $2.6bn (-1.1% m/m in November).

Worryingly, South Africa’s international liquidity position (ILP), which represents its net forex reserves, fell 0.5% m/m to $42.7bn as of end-December, declining for the sixth month in a row. The decline was caused mainly by a 32% drop to $2bn in the forward position, which represents SARB’s unsettled spot or swap transactions, partly offset by the growth in gross reserves and a 1.6% fall to $8.4bn in the received foreign currency deposits. In November, the net reserves narrowed by 0.3% m/m after a 0.6% m/m decline in October.

SARB has been building foreign currency reserves to act as a buffer against currency volatility. Compared to the end of 2013, gross reserves were 1.0% lower at end-2014, whereas net reserves were 6.1% lower.

$mn Dec-14 Nov-14 m/m change
Gold reserves 4,826 4,765 1.3%
SDR holdings 2,590 2,618 -1.1%
Foreign exchange reserves 41,686 41,157 1.3%
Gross reserves 49,102 48,540 1.2%
Foreign currency deposits received -8,351 -8,488 -1.6%
Forward position 1,975 2,894 -31.8%
International liquidity position 42,726 42,946 -0.5%
Source: SARB      

Related Articles

Russia's Rosneft sets foot in Mediterranean with $1.125bn Eni deal

Russia's largest oil producer state-controlled Rosneft has acquired 30% in the largest natural gas field in the Mediterranean from Italian Eni, the company announced on October 9. Rosneft that ... more

PetroSA, Rosgeo sign $400mn oil and gas exploration agreement for South Africa

South Africa's national oil company PetroSA and Rosgeo, the geological exploration company of the Russian Federation, have signed an agreement on a $400mn oil and gas development project in South ... more

South Africa’s MTN to invest $350mn in Iranian broadband

South Africa’s MTN said it has agreed, on a non-binding and preliminary basis, to invest an initial $350mn into Iranian fixed broadband provider Iranian Net. The investment will give ... more