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2023-07-08 11:19 AM

South African Reserve Bank Reveals Gold and Foreign Exchange Reserves

  • South African Reserve Bank's gold reserves decrease while SDR holdings and foreign exchange reserves show modest increases: As of June 2023, the SARB's gold reserves declined by US$227 million, while SDR holdings increased by US$16 million and foreign exchange reserves rose by US$465 million. These figures provide insights into the country's financial stability and foreign currency holdings.
  • Exchange rate fluctuations and gold price movements impact the reserves: The exchange rates between the Euro, British Pound, and South African Rand against the US Dollar experienced changes, reflecting shifts in global currency markets. Additionally, the market and statutory gold prices experienced declines, influenced by global gold market fluctuations and asset price movements.
  • Factors influencing the reserves' changes and the SARB's efforts to manage them: The changes in gross reserves and the international liquidity position were influenced by various factors, including a foreign loan received on behalf of the government, adjustments due to currency and asset price movements, and a decline in the US dollar gold price. The SARB actively manages the reserves to protect the economy from external shocks and ensure the smooth functioning of financial services in South Africa.
By Miriam Matoma

The South African Reserve Bank (SARB) has released an information notice detailing the official gold and foreign exchange reserves as of June 30, 2023. The notice includes the US dollar equivalent of the SARB’s reserves, Special Drawing Rights (SDRs), and foreign currency deposits received from customers. The Statement of Assets and Liabilities published by the SARB provides a comprehensive overview of these figures.

As of June 30, 2023, the SARB’s gold reserves amounted to US$7.681 billion, representing a decrease of US$227 million compared to the previous month. The decline can be attributed to various factors, including fluctuations in the gold price and adjustments due to foreign currency and asset price movements.

The SDR holdings stood at US$6.284 billion, showing a slight increase of US$16 million compared to the previous month. SDRs are an international reserve asset created by the International Monetary Fund (IMF) and are used as a supplementary foreign exchange reserve.

The foreign exchange reserves, including foreign currency deposits received (FDR), totaled US$47.585 billion, reflecting a month-on-month increase of US$465 million. These reserves play a crucial role in supporting the stability and liquidity of the country’s financial system.

Overall, the SARB’s gross reserves reached US$61.550 billion, representing a modest increase of US$254 million compared to the previous month. However, the international liquidity position (ILP), which takes into account various factors including gross reserves, decreased slightly from US$55.045 billion to US$54.936 billion.

Examining the exchange rate changes, the EUR/US$ rate increased from 1.0859 to 1.0682, indicating a depreciation of the euro against the US dollar. Similarly, the GBP/US$ rate decreased from 1.2649 to 1.2364, reflecting a depreciation of the British pound against the US dollar. The US$/ZAR rate experienced a significant decline from 18.9526 to 19.7917, indicating a weakening of the South African rand against the US dollar.

In terms of gold prices, the market price declined from US$1,904.89 to US$1,961.23, while the statutory price in ZAR decreased from ZAR 36,102.62 to ZAR 38,816.08. These changes can be attributed to fluctuations in the global gold market and asset price movements.

The changes in the gross reserves and international liquidity position were primarily influenced by several factors. These include a foreign loan of US$500 million received on behalf of the government from the New Development Bank (NDB), adjustments due to foreign currency and asset price movements, and the decline in the US dollar gold price. Partially offsetting these factors were foreign exchange payments made on behalf of the government.

The SARB’s gold and foreign exchange reserves are crucial for ensuring the stability and resilience of the country’s financial system. These reserves play a vital role in supporting the South African economy, facilitating international trade, and maintaining the country’s ability to meet its external financial obligations.

It is important to note that the figures provided in this notice may not add up precisely due to rounding. The SARB’s efforts to manage and maintain these reserves reflect its commitment to prudent financial management and safeguarding the nation’s economic interests.

As the global economic landscape continues to evolve, the SARB’s gold and foreign exchange reserves will remain a key indicator of South Africa’s financial strength and stability. The central bank’s proactive approach to managing these reserves is aimed at protecting the economy from external shocks and ensuring the smooth functioning of financial services, credit, lending, personal finance, motor vehicles, insurances, and banking sectors in the country.

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Miriam Matoma

Miriam is a freelance writer, she covers economics and government news for Rateweb. You can contact her on: Email: miriam@rateweb.co.za Twitter: @MatomaMiriam