The substantial capital inflows into South Africa therefore enabled us to achieve our objectives with the replenishment of the official foreign reserves, and the gradual relaxation of the exchange controls. The future programme with the removal of the remaining exchange controls will, as over the past three-and-a-half years, be very dependent on a continuation of net capital inflows from the rest of the world.
The objectives of reserve management vary across countries, and a recent survey of reserve management practices of select countries (IMF guidelines, 2001) provide good insights on the subject. First, most countries hold reserves to support monetary policy.