SA’s gross reserves dip as gold price falls

07 June 2016 - 12:46 By Staff Writer

SA’s gross reserves‚ which include gold and foreign exchange‚ dipped in May‚ thanks partly to the fall in the dollar-denominated gold price.The Reserve Bank’s holdings of gross reserves fell $875m to $46.1bn in May‚ affected also by currency valuations and foreign exchange payments made on behalf of the government.Foreign exchange reserves are an important indicator of a country’s ability to repay foreign debt in the short term and are used for currency defence.Reserves are also one of the factors used to determine a country’s credit rating.SA last week received a stay of execution from Standard & Poor’s‚ which maintained the country’s investment-grade rating‚ following a similar move by Moody’s in May. Fitch is expected to make its announcement on SA’s credit rating on Wednesday evening.Meanwhile‚ the international liquidity position fell $677m to $40.5bn‚ in part due to a decline in the gross reserves. – TMG Digital/BDlive

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