adminThe Rhodesia Herald, 4 November, 1965
FIGURES released yesterday show that the foreign assets of the Reserve Bank of Rhodesia fell by £4,6 million – about 17 percent, – in the last fortnight of October.
On October 30 the value of foreign assets held by the Reserve Bank was £20 599 000. On October 15 they stood at £25 227 000, and on October 22 were £22 794 000.
Combined with the unchanged gold holdings of £3 502 000, the external backing for the Rhodesian currency was £24,1 million, at the end of October, compared with £28, 7 million two weeks previously. The foreign assets held by the Reserve Bank, combined with the gold holdings, provide the backing for the Rhodesian currency.
The level at which they stand at any given time shows the country’s ability to pay its way, and is an important influence on the outside world’s opinion of the viability of the Rhodesian economy.
The level of the foreign reserves is affected by a number of factors. An inflow of capital should give them a boost, an outflow reduces them.
They are strengthened by favourable balances on visible trade and on the balance-of-payments current account which includes all the “invisible” items like freight, insurance, dividend and holiday payments, as well as ordinary trade and are weakened by an adverse balance.
There is no doubt that one of the reasons for the decision to bring in import control – the other reason, quite bluntly, is the fact that the move is an essential pre-requisite to a UDI if there is to be a UDI – is the fact that it will lead to a saving in foreign exchange, although it is unlikely to do so for some time because of the delay there must be in a reduced volume of new orders coming in under import control.
The volume of imports so far brought into the country this year, although they are up on 1964, has not led to any balance-of-payments problems.
LESSONS FOR TODAY
It can be concluded that the foreign assets of the Reserve Bank of Rhodesia fell by approximately £4.6 million (about 18.35 percent) from October 15 to October 30 due to the impending UDI.
Meanwhile, the Reserve Bank of Zimbabwe (RBZ) has faced significant challenges regarding its foreign assets in recent years. The overall state of these assets is influenced by several factors, including the country’s economic policies, exchange rate management, and external debt levels.
Online Reporter