Get more Mail & Guardian
Subscribe or Login

SA to diversify reserves by buying won, Aussie and Kiwi dollars

South Africa’s Reserve Bank plans to diversify its foreign currency reserves by buying South Korean won and the Australian and New Zealand dollars, Deputy Governor Daniel Mminele said.

This follows an agreement earlier this year to invest about $1.5-billion, or 3% of reserves, in Chinese bonds, Mminele said at a conference in Johannesburg on Tuesday, according to a copy of the speech on the Reserve Bank’s website.

The bank, which had gross reserves of $50-billion at the end of September, is seeking to broaden its foreign-currency holdings and invest in other assets amid speculation the US Federal Reserve will start reducing bond purchases, Mminele said.

Teh Reserve Bank has already started buying covered bonds and mortgage-backed securities and recently began trading in bond futures to hedge against rising yields, he said.

"The South African Reserve Bank is acutely aware of the risks facing the global environment emanating from asset tapering, and with this in mind made a strategic decision to diversify its currency exposure to help insulate reserves from this potential rise in US Treasury yields," Mminele said.

The bank has been building foreign-currency reserves to help bolster the rand, which has dropped 17% against the dollar this year. The local currency fell 0.7% to 10.20 per dollar as of 12.30pm in Johannesburg on Tuesday. – Bloomberg

Vote for an informed choice

We’re dropping the paywall this week so that everyone can access all our stories for free, and access the information they need in the run up to the local government elections. To follow the news, sign up to our daily elections newsletter for the latest updates and analysis.

If our coverage helps inform your decision, cast your vote for an informed public and join our subscriber community. Right now, you can a full year’s access for just R510. Subscribers get access to all our best journalism, subscriber-only newsletters, events and a weekly cryptic crossword.

Related stories


Already a subscriber? Sign in here


Latest stories

Local elections 2021: A visual guide to what to expect

What are the biggest election issues where you live? M&G explains all

South Africa must approach its energy transition pragmatically

A sensible climate policy must balance the imperative of decarbonisation, socioeconomic policy and security of supply considerations

Steel strike: Workers struck while the iron was hot

After almost three weeks, labour and employers have reached a deal — setting the steel industry back on its path to recovery

Why handing over ICC suspects could help Sudan’s transition

A failed coup in September, weeks of brinkmanship, and a looming crisis in eastern Sudan have laid bare tensions between civilians and military leaders

press releases

Loading latest Press Releases…