South Africa's gold and foreign currency reserves rose for the month of December, the South African Reserve Bank (SARB) said on Thursday.
The SARB said that gross reserves grew to 34,099 billion U.S. dollars for December from 33,216 billion dollars in November.
Net reserves increased to 33,455 billion dollars from 32,576 billion dollars in the previous month.
Net foreign currency holdings rose to 30,615 billion dollars from 29,967 billion dollars and gold reserves increased by 235 million dollars to 3,484 billion dollars.
"The firmer gold price has continued to boost the international liquidity position, while the U.S. dollar's weakness contributed to a rise in the value of foreign exchange reserves in December," Nedbank Group's economic unit said in its commentary on the data.
"Uncertainty and volatility in global financial markets have continued to inhibit the Reserve Bank's natural tendency to accumulate reserves," Nedbank added.
It said that global uncertainty was likely to persist in the short term as the outlook for the global economy deteriorates.
"South Africa's external position will be vulnerable given the size of the current account deficit and approaching elections.
"Reserves will probably remain under pressure over the next few months."
However, Nedbank said that reserves remained at respectable levels relative to imports and the policy focus would be on growth over the next few months.
"Given the weak state of the local economy and the deflationary environment globally, we would expect the SARB's Monetary Policy Committee to continue relaxing monetary policy at each of its meetings in 2009," Nedbank said.
This would result in a cumulative 300 basis points decline in the prime lending rate to 12 percent by year end, it added.
Source:Xinhua
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