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SARB to hoard gold
Article By: Michael Hamlyn
Tue, 31 Mar 2009 12:03 AM
The Reserve Bank is planning to increase its hoard of gold, as it juggles the different currencies in which its reserves are denominated.
At present, according to Governor Tito Mboweni, around 11 percent of the
country's reserves are in gold. The rest are in a combination of dollars,
pounds and euros.
Speaking informally in Cape Town on Thursday evening, the governor said
that when he came to the post, ten years ago, the vaults containing the
reserves were virtually empty. Today the reserves amount to as much as 90 percent of the value of the bank's balance sheet.
Mboweni said he has no target for the gold reserves to reach, but will
just begin to increase the proportion held in gold slowly.
Bank officials noted that China has proposed a different reserve
currency ? possibly based on special drawing rights ? to take the place of
the dollar. The Chinese are possibly fearful that a drop in the value of the
dollar will wipe out a large proportion of their own reserves.
It is not long since central banks decided to unload much of their gold
reserves on to the market in a series of carefully controlled sales.