SA reserves rise

JOHANNESBURG – South Africa’s net reserves increased by $555 million during September, data showed on Friday, but there was still no sign of the capital flows from Barclay’s purchase of a controlling stake in local bank Absa.

Monetary authorities have not shed any light on how the flows generated by the British bank’s payment of about 28 billion rand for control of Absa would be handled. But last month, an official at the central bank said proceeds from the transaction, the biggest foreign direct investment in South Africa’s history, would be reflected in the bank’s third quarter bulletin as an FDI.Net reserves rose to US$16,056 billion from US$15,501 billion at the end of August, the central bank said in a statement posted on its website.Gross reserves increased to US$19,535 billion from US$18,961 billion.A combination of valuation adjustments and foreign exchange operations carried out by the Reserve Bank for its own account and on behalf of customers was responsible for pushing the forex component of reserves higher, the bank said.Higher gold prices nudged the value of the bullion component up to US$1,89 billion from US$1,72 billion, it added.”The Barclays/Absa capital inflows have not yet filtered through into official reserves,” said Nedbank economist Magan Mistry.”The bank is probably comfortable leaving them in the private banking sector, improving liquidity and helping the rand to remain more stable.”Reserves in the private banking sector nudged up to US$20,5 billion at the end of August from US$19,7 billion in July – when they climbed by more than US$3 billion, in a move seen as related to the banking purchase.Analysts believe the central bank is keeping the inflows from the Barclays/Absa deal in the private banking sector as it does not want to introduce volatility in the forex market.The rand trended weaker, trading around 6,5520 per dollar by 0730 GMT versus 6,5325 before the data.But traders attributed the soft tone to growing risk aversion globally.Analysts said an increase of the forex component of reserves to US$17,647 billion at the end of September from US$17,238 billion at the end of August suggested the bank was active in the foreign currency market during September.The Reserve Bank often takes advantage of rand strength to buy dollars in the market to boost its reserves, but has repeatedly said the action is not intended to influence the exchange rate of the rand.- Nampa-ReutersBut last month, an official at the central bank said proceeds from the transaction, the biggest foreign direct investment in South Africa’s history, would be reflected in the bank’s third quarter bulletin as an FDI.Net reserves rose to US$16,056 billion from US$15,501 billion at the end of August, the central bank said in a statement posted on its website.Gross reserves increased to US$19,535 billion from US$18,961 billion.A combination of valuation adjustments and foreign exchange operations carried out by the Reserve Bank for its own account and on behalf of customers was responsible for pushing the forex component of reserves higher, the bank said.Higher gold prices nudged the value of the bullion component up to US$1,89 billion from US$1,72 billion, it added.”The Barclays/Absa capital inflows have not yet filtered through into official reserves,” said Nedbank economist Magan Mistry.”The bank is probably comfortable leaving them in the private banking sector, improving liquidity and helping the rand to remain more stable.”Reserves in the private banking sector nudged up to US$20,5 billion at the end of August from US$19,7 billion in July – when they climbed by more than US$3 billion, in a move seen as related to the banking purchase.Analysts believe the central bank is keeping the inflows from the Barclays/Absa deal in the private banking sector as it does not want to introduce volatility in the forex market.The rand trended weaker, trading around 6,5520 per dollar by 0730 GMT versus 6,5325 before the data.But traders attributed the soft tone to growing risk aversion globally.Analysts said an increase of the forex component of reserves to US$17,647 billion at the end of September from US$17,238 billion at the end of August suggested the bank was active in the foreign currency market during September.The Reserve Bank often takes advantage of rand strength to buy dollars in the market to boost its reserves, but has repeatedly said the action is not intended to influence the exchange rate of the rand.- Nampa-Reuters