South Africa's Forex Reserves Hit A New High Of $54.844 Billion

According to the Reserve Bank, South Africa's net foreign reserves increased to $54.844 billion in January from $53.827 billion in December.

Additionally, gross reserves rose from $60.570 billion in December to $61.864 billion in January. The forward position, which represents the central bank's unresolved or swap transactions, increased to $0.555 billion from $0.554 billion, Reuters reported.

The most recent figure mainly reflected the proceeds from foreign borrowings of $ 327 million from KfW Development Bank, the increase in the U.S. dollar gold price, valuation adjustments brought on by the devaluation of the U.S. dollar, and asset price fluctuations. Foreign exchange payments made on the government's behalf helped to counteract these effects to some extent.

Foreign Exchange Reserves are the foreign assets the South African central bank owns or controls. Gold or a specific currency serves as reserves. Additionally, they could be SDRs, marketable assets with foreign currency denominators like Treasury Bills, Government Bonds, Corporate Bonds, and Equities, as well as Foreign Currency Loans.

Meanwhile, the International Monetary Fund (IMF) forecasts that South Africa's GDP will grow by 1.2% this year, which is slightly higher (+0.1%) than its prediction from October last year. It anticipates 1.3% growth in the next year, despite record-high levels of load shedding.

"In South Africa, by contrast, after a Covid-19 reopening rebound in 2022, projected growth more than halves in 2023 to 1.2%, reflecting weaker external demand, power shortages, and structural constraints," the IMF said, as reported by IOL.

The South African Reserve Bank recently predicted growth of 0.3% but explicitly stated that the "magnitude of load shedding" will reduce growth by as much as two percentage points in 2023.

The economic growth impact of load shedding last year may have been as high as five percentage points, according to a report released this week by the international accounting company PwC.

Nevertheless, the prices of the goods South Africa exports and produces, such as iron ore and platinum group metals, are expected to rise thanks to China's improved prospects and global growth in general. That undoubtedly supports the characteristics of South Africa's economic growth.