The South African Reserve Bank reported a R1.2 billion after-tax loss in the year ended March 2011, it said in its Annual Report released on Tuesday 14 June.
According to the document, capital flows to many emerging markets in the final quarter of 2010 and early 2011 with a similar pattern were observed in South Africa.
Between November 2010 and March 2011, there were cumulative net sales of bonds and equities by non-residents. Even through the unstable pattern of capital flows, the bank, with the help of National Treasury, has been able to continue with its policy of foreign exchange reserve accumulation.
“In the 2010/11 financial year, the Bank purchased approximately $10.3 billion for this purpose. The need to sterilise the impact of these purchases of foreign exchange on domestic liquidity resulted in the Bank reporting an after-tax loss for the second consecutive financial year, amounting to R1.2 billion,” said the report.
In the 2010/11 financial year, the central bank purchased approximately $10.3 billion for purposes of foreign-exchange reserve accumulation.
These purchases were partly reflected as an increase in the government’s foreign currency deposit with the Bank (and therefore the gross reserves) and partly as an increase in the overbought forward position (and therefore the international liquidity position).
The successful strategy of reserve accumulation in recent years enabled the bank to reduce gradually the level of borrowed reserves. – BuaNews
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