The South African Reserve Bank has become “more active” buying dollars in the foreign-exchange market in March after the rand advanced to a five-month high, ETM Analytics said.
“Market talk suggests that the Reserve Bank has become more active in mopping up some dollars towards 7.5000 rand” per dollar, George Glynos, an analyst at the Johannesburg-based company, which advises corporations on foreign-exchange transactions, said in an e-mailed research note. Central bank intervention “should leave the downside reasonably well contained and the dollar-rand continuing to trade in a 7.48 to 7.60 range,” he added.
The rand has climbed 7.3 percent against the dollar this year, rising to 7.4025 per dollar on Feb. 29, the strongest level since Sept. 19. It retreated 0.2 percent today to 7.5393 as of 11:18 a.m. in Johannesburg.
The Reserve Bank adds to its foreign-exchange reserves “as and when appropriate,” though it doesn’t target a level for the rand and won’t sell dollars to defend the currency, Governor Gill Marcus said in October. The bank’s mandate is to keep inflation within a 3 percent to 6 percent target range.
The central bank’s gross foreign exchange and gold reserves rose 0.9 percent in February from the previous month to a record $51.9 billion as the price of gold surged and the dollar weakened, boosting the value of other foreign currencies, the Pretoria-based Reserve Bank said on March 7. The bank probably made no “material” dollar purchases in the month, Standard Bank Group Ltd. said in a research note on the same day.