OWN CORRESPONDENT, Pretoria | Thursday 1.00pm
THE Reserve Bank increased its pool of foreign reserves in February and reduced its foreign borrowing, but not by as much as economists were expecting and financial markets were muted.
Gross gold and foreign exchange reserves increased by R400-million to R47-billion and the Reserve Bank’s net open foreign exchange position (NOFP) — its uncovered exposure to the forward foreign currency market — was reduced to $11,1-billion from $11,5-billion in January.
Economists polled by Reuters had forecast reserves of R47,1-billion and a reduction in the NOFP to $10,9-billion. ”The central bank seems not to have been as active in the market in February because of the weaker rand,” said Noelani King at PSG Investment Bank.
Foreign credit lines were reduced to R16,4-billion from R17,3-billion. The rand was unchanged after the news, trading at R6,34 to the dollar.
At the start of February the rand was at R6,25. Yields on the government’s benchmark five-year bond, the R150, rose two basis points to 13,09% as prices fell slightly. Economists said the relative weakness of the rand during February probably made it more difficult for the central bank to buy dollars to unwind its forward commitments — the forward book — although rand depreciation did boost rand reserves.
”The figures are perhaps slightly on the disappointing side, particularly on the forward book front. But on the reserves, as with last month, there was quite a healthy improvement,” said Adenaan Hardien, an economist at Velocity Asset Management. — Reuters