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Gross reserves rose to US$45,471 billion in January from US$43,834 billion, the central bank said in a statement posted on its website. The forward position, which represents the bank’s unsettled spot or swap transactions, was at US$4,312 billion compared with US$4,183 billion in December. “Looking at them initially it would appear that the South African Reserve Bank has been more active and it’s pushing back against rand appreciation and this is pretty similar to a number of other emerging market that want to limit the appreciation of their currencies.

“Also this would suggest that the bank feels more comfortable with the inflation outlook, which allows them to shift some focus to South Africa’s terms of trade. A weaker currency theoretically helps exports.

Basically the data signals that the bank has become more active.”
The rand was trading slightly firmer at 7,24 against the dollar from 7,2450 before the data was released. Traders have reported more aggressive central bank intervention in the market since the start of this year to buy foreign exchange, helping weaken the rand after it gained about 12 percent against the dollar last year.

The Reserve Bank has said it will continue building up foreign exchange reserves whenever appropriate.
The bank started using the forward position in August last year to mitigate the sterilisation costs of building reserves.
It buys dollars in the spot market and settles them by entering into longer-term contracts. — Reuters.