OWN CORRESPONDENT, Johannesburg | Thursday
THE South African central bank’s net open forward position (NOFP) dipped $400m in April, buoyed by inflows from a E500m bond issue, figures on Thursday showed.
The NOFP – a measure of the central bank’s uncovered exposure to its forward foreign exchange commitments – dropped to $9.0bn, beating market expectations of an easing to $9.1bn.
This is the biggest unwinding of the position, seen as the Achilles’ heel of the rand, in more than six months.
Central bank governor Tito Mboweni has repeatedly pledged to eliminate both the NOFP and forward book, which were built up in past years to defend the rand against speculative attacks.
The outstanding oversold position on the forward book fell to $14bn from $14.5bn. The NOFP and forward book peaked at $23.2bn and $25bn respectively at the height of the 1998 emerging markets crisis.
“The improvement in the NOFP and the forward book is mainly attributable to the proceeds of the Republic of South Africa Euro 500 million 7.0% notes,” the central bank said in a statement.
The volatile rand initially ignored the data, but later weakened about three cents amid disappointment with lack of improvement in the gross reserves and lingering jitters over the fate of an $18.7bn offer by an Anglo-led consortium for diamond giant De Beers.
“It is a fairly neutral set of numbers…I would have thought they could have increased reserves and so it shows that reserves remain under some pressure,” said Dennis Dykes, chief economist at Nedcor.
South Africa’s combined gold and foreign exchange reserves were almost unchanged at R60.2bn from R60.3bn at the end of March and against market expectations of a rise to R62.0bn.
The central bank trimmed its use of foreign credit lines to R20.7bn from R20.8bn at the end of March. – Reuters
ZA*BUSINESS:
Mboweni gets tough with speculators March 29, 2001
SA suffers huge loss on forward book January 10, 2001
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