admindecreased on a stronger dollar against major currencies, causing a decline in foreign currency reserves.
The central bank said yesterday net gold and foreign exchange reserves fell to US$48,633 billion in November from US$49,221 billion in October, also as the forward position of the bank declines.
A Reuters poll showed the market was expecting net reserves to fall to US$49,05 billion in October.
A stronger dollar weakened the value of foreign currency-denominated assets held by South Africa.
Analysts don’t believe the bank was actively accumulating reserves in November as that would increase the volatility of the rand.
“If the central bank is sensitive to the volatility in the currency they’re not going to want to exaggerate that volatility by getting involved in the market,” said Mr George Glynos, an analyst at research house ETM.
“That would just make matters worse so they tend not to intervene at all when the currency is fluctuating.” The rand has fallen 20 percent against the dollar so far this year, hit by risk aversion from the eurozone debt crisis, and hit a two-and-half-year low of 8,61 in November. It was trading at 7,96 against the dollar on Tuesday, off the session low of 8,0407.
The Reserve Bank has said limiting the rand’s gyration was out of its hands, as the currency is traded heavily in global markets.
South Africa’s government also withdrew US$156 million of its deposits at the central bank, which decreases foreign currency deposits.
The treasury has said it will draw on its cash balances at the central bank to help plug a wider budget deficit, instead of borrowing more. – Reuters.
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