South Africa’s Foreign Currency Reserves Slide 1.4% as Dollar Strengthens
South African gross gold and foreign currency reserves fell for the second time in three months in November as a stronger dollar cut the value of euros and pounds held by the central bank.
Gross reserves dropped 1.4 percent to $49.7 billion, the Pretoria-based Reserve Bank said on its website today. The median estimate in a Bloomberg survey of nine economists was for reserves to rise to $50.5 billion. Net reserves declined to $48.6 billion from $49.22 billion.
The dollar strengthened against 15 of the 16 major currencies tracked by Bloomberg in November as a worsening European debt crisis prompted investors to sell higher-risk, emerging market assets for the U.S. currency and gold.
“The decrease in gross reserves was primarily due to the appreciation of the U.S. dollar against other major currencies which led to a sizable downward valuation adjustment in the foreign exchange reserves,” the central bank said.
The Reserve Bank has slowed the pace of dollar purchases this year to avoid adding to the rand’s weakness after the currency fell 17 percent against the dollar, the worst performer amongst major currencies. The rand gained 0.3 percent to 8.0051 per dollar as of 8:29 a.m. in Johannesburg today.
Gold reserves, which accounts for about 14 percent of gross holdings at the central bank, fell by $22 million to $6.9 billion, the bank said.
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