The South African Reserve Bank publishes data on its holdings of foreign exchange, gold and IMF Special Drawing Rights on a monthly basis. A lot of the focus is on net foreign reserves, which SARB data on Monday 7 October 2019 showed fell in September to $44.058-billion from $44.226-billion. This is hardly front-page news.
This helps to provide an extra cushion against external shocks — something the economy can really use in these volatile times. Among other things, it raises South Africa’s import cover to 6.6 months. Broadly, this is also positive for the rand. Having said that, the Reserve Bank is not seen using its relatively cash-flush position to intervene forcefully in the markets to defend the currency. There are plenty of examples of why caution is wise in this regard, notably Argentina, which has been burning scarce reserves to defend its peso in a largely futile battle.