South African Foreign Currency, Gold Reserves Increase More Than Expected
South African reserves jumped 2.7 percent in April as the central bank boosted foreign currency purchases and the dollar weakened, raising the value of euro, pound and other holdings.
Gross gold and foreign currency reserves increased to $50.6 billion last month, the Pretoria-based Reserve Bank said on its website today. Net reserves increased to $46 billion from $44.7 billion in March.
The dollar weakened against all 16 major currencies tracked by Bloomberg in April, falling 4.3 percent against the euro and 3.1 percent against the rand. The Reserve Bank has pledged to build reserves to help curb the rand and support the recovery in Africa’s biggest economy.
“The increase in the gross reserves was primarily due to valuation adjustments associated with the increase in the U.S. dollar price of gold and the depreciation of the U.S. dollar against other major currencies, as well as foreign exchange purchases,” the central bank said.
Gold reserves, which account for about 12 percent of gross reserves, increased by $421 million to $6.2 billion in April from the previous month, the data showed. The spot price of gold surged 9.2 percent last month, reaching an intraday high of $1,569.32 an ounce during the month.
The rand has climbed 6.8 percent against the dollar since the beginning of February, undermining the competitiveness of exports and hurting manufacturers. The currency was at 6.6827 against the dollar as of 8:39 a.m. in Johannesburg from 6.6980 before the data was released.
“We have an overvalued currency driven by flows of capital,” Trade Minister Rob Davies said on May 5. “The over- valued currency is having a detrimental impact on a number of industrial activities.”
To contact the reporters on this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net; Franz Wild in Johannesburg at fwild@bloomberg.net
To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net
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