MICHAEL METELITS, Johannesburg | Tuesday 3.00pm.
THE Reserve Bank reported on Tuesday that its provisional gross gold and foreign exchange reserves to the end of last month were up marginally on the February figure.
In a statement issued in Pretoria, the Bank said the provisional gross gold and foreign exchange reserves amounted to R32,9-billion at March 31, compared to R32,7-billion at February 28.
Nedcor chief economist Dennis Dykes sees this as “slow, steady improvement”, and notes some benefits to a less than aggressive build-up of the reserves.
“If the Reserve Bank pulls dollars out of the market into reserves, it makes the market short of dollars,” saids Dykes. This can present problems when importers or other players need dollars, since scarcity drives up prices, meaning a weaker rand.
Dr Cees Bruggemans of First National Bank agreed, citing increased reserves both at the Reserve Bank and in the financial system as a whole, as reflected in the money supply figures released last week.
“It is in line with policy not to mop up spare dollars, and the overall cash flow is positive. The situation has not deteriorated,” said Bruggemans.
Closely related to the reserves issue is the forward book of the bank, the open transactions agreed to in the future. The outstanding oversold forward book of the bank was $24,2-billion at close of business on March 31, compared to $24,4-billion at the end of February. Some observers believe the Bank is mellowing any assault on the reserves and forward book to forestall the impression of lack of faith in the rand.
The use of foreign credit lines at the end of March amounted to R17,9-billion, compared to R18-billion at the end of February. Foreign credit lines add risk to government finance, as they must be paid back in foreign currency, and any decline in the rand effectively increases the debt.