In making rand-denominated deposits with the Bank, the National Treasury assists with absorbing the excess liquidity created by the purchases of foreign exchange. As at the end of June 2006, government deposits at the Bank, the greater part of which related to this sterilisation initiative, amounted to R36,2 billion.
The higher level of foreign exchange reserves resulted in an increased focus on the management thereof to ensure safety, liquidity and an adequate return within conservative risk parameters. At the end of June 2006, the internally managed portfolios comprised 81 per cent of gross reserves, with the balance managed externally.