S.Africa's net reserves dip in February as dollar gains

Africa’s net gold and foreign exchange reserves fell slightly in February due to a firmer U.S. dollar, official data showed on Friday.

 The central bank said in a statement posted on its website the international liquidity position fell to $38.281 billion at the end of February from $38.63 billion in January. 

Gross reserves inched down to $39.439 billion in February from $39.489 billion. Currency reserves fell by $100 million to $32.251 billion while special drawing rights holdings stood at $2.735 billion. 

“Due to the diversified nature of the foreign exchange reserves, the appreciation of the U.S dollar against various currencies impacted negatively on the foreign exchange reserves,” the central bank said. 

The central bank still holds a large proportion of its reserves in U.S. dollars but has moved recently to increase holdings of euro and sterling. 

George Glynos, managing director at ETM, said reserves will likely rise next month after South Africa launched a $2 billion Eurobond earlier this week.  “If there’s going to be a build-up in reserves it might come through next month as a result of proceeds from the $2 billion bond,” he said.  “There was also some rand weakness in February so they would have naturally scaled back on purchasing reserves back then,” Glynos added. 

The rand lost about 2 percent against the dollar last month.  The central bank has steadily lifted reserves over the past five years.  Gold reserves were up by $99 million to $4.453 billion as the price of gold rose by $24.6 an ounce in the month.

Source: reuters, 20100305

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