For some time there has been a need to build up the country’s holdings of foreign exchange reserves, which were – and still are – low in comparison to IMF estimates of reserve adequacy and our emerging market economy peers.
The need to accumulate these reserves was driven by the imperative to reduce the country’s vulnerability to sudden large outflows of capital, something to which our economy is prone. We have made good progress in this regard in the past 10 years, with gross gold and foreign exchange reserves increasing from $ bn in June 2003, to current levels of $ bn.