Question 1 – The losses incurred and explanation of Gold and Foreign Exchange Contingency Reserve Account (GFECRA) The Bank acquires foreign exchange for reserves accumulation purposes, and in the process injects rand liquidity into the domestic money market.
In order for domestic money-market conditions to reflect the prevailing monetary policy stance as determined by the MPC, such liquidity needs to be sterilised (or drained) from the system. This is done, inter alia, by openmarket operations conducted by the Bank by way of issuing SARB debentures, and conducting reverse repurchase transactions.