These inflows enabled the Bank to further increase its holdings of foreign exchange reserves. By the end of May, official gross gold and other foreign exchange reserves had increased to $ billion, while the international liquidity position had increased to $ billion. This is a significant improvement on the negative average international liquidity position of almost $ billion in 2000.
The stronger reserves position is expected to contribute to greater stability in the foreign exchange market and reduce South Africa’s vulnerability to external shocks. The recent inflows have been mainly equity or FDI inflows, reflecting the fact that favourable growth prospects have been key, and will be critical for future inflows.