SA’s gross reserves take a hit from lower gold price
SA’s gross reserves, which include gold and foreign exchange, declined in July, partly as result of the drop in the value of the gold price.
Foreign exchange reserves are an important indicator of a country’s ability to repay foreign debt in the short term, and are one of the factors used to determine a country’s credit rating.
The Reserve Bank’s holdings of gross reserves declined by $71m to $50.511bn as at July 31, compared with $50.582bn at end-June, data showed on Tuesday.
The drop in gross reserves came as the value of the gold price dropped 2.2% on average to $1,223.17 an ounce, weighed down partly by a stronger dollar.
Foreign exchange reserves increased by $43m to $43.07bn at end-July, from $43.027bn at end-June. Gold reserves fell by $111m, to $4.928bn from $5.039bn.
Foreign exchange payments on behalf of the government also weighed on gross reserves, the Bank said.
The international liquidity position fell by $7m, to $42.44bn in July from $42.447bn in July, with the Bank saying the drop partly reflected a drop in gross reserves.