OWN CORRESPONDENT, Johannesburg | Monday
SOUTH Africa’s combined gold and foreign exchange reserves rose more strongly than expected in November, despite a hefty outflow of portfolio investment, according to newly-released Reserve Bank figures.
The central bank said its gross reserves rose to R58.0bn by the end of November from R56.8bn in the previous month.
The figures – better than market expectations of an increase to R57.4bn – were boosted by the more than two percent depreciation of the rand in the month and use of credit lines.
”The reserves figure in rand was boosted by the rand depreciation of 2.6 percent in the month, there was very little impetus from anywhere else,” said Goolam Ballim, an economist with Standard Bank.
”We have seen a net outflow in excess of R2bn from short-term portfolio investment,” he said.
The Reserve Bank’s open net open foreign exchange position – a measure of its uncovered exposure to its forward foreign exchange commitments – improved to $9.5bn versus $9.6bn in October.
Analysts had predicted the NOFP – seen as the Achilles heel for the volatile rand – declining to $9.5bn.
South African financial markets ignored the data, with the rand little moved at opening levels around 7.6280/dollar on the back of firmer euro tone.
The yield on the benchmark five-year R150 bond held firmer at 12.23%, benefiting from the stronger rand and flight from underperforming domestic equities.
”I don’t think it will have much of an impact on the markets seeing that the NOFP, which is the most important figure, came in line with expectations,” said Noelani King, economist at PSG Investment Bank.
The bank said the use of foreign credit lines was R20.1bn at the end of November, up from R19.6bn at the end of October.
The outstanding oversold position on the forward book was $14.5bn compared to $14.6bn at the end of October. – Reuters