The South African Reserve Bank is set to invest in currencies such as the Korean Won, Australian Dollar and the New Zealand Dollar.
“The bank has also taken steps to invest in new currencies. [It] will be diversifying into currencies such as the Korean Won, Australian Dollar and New Zealand Dollar,” said SARB Deputy Governor Daniel Mminele.
In his address at the Standard Bank 5th African Central Bank Reserves Management conference on 4 November 2013, the deputy governor said that for the first time in the central bank’s history, a portion of the reserves will be invested in the Chinese interbank bond market.
“South Africa was the first African central bank to be granted an investment quota for the Chinese onshore market. The Chinese bond market is the world’s first largest, continues to grow rapidly in both depth and liquidity and the onshore market provides more favourable yields,” said Mminele.
New asset classes that the bank has begun to invest in include covered bonds and mortgage-backed securities. SA has recently begun trading in bond futures to mitigate the potentially negative impact of rising bond yields on the reserves, as well as for more efficient portfolio management.
Mminele said that investing in these instruments demanded better skilled staff and more sophisticated information technology and risk system.
The bank has gained a great deal of training through external fund managers, including the two official sector fund managers, namely the Bank for International Settlements and the World Bank.
The central bank has been part of the World Bank’s Reserves Advisory and Management Programme (RAMP) since 2006, through which bank staff not only received extensive training but are now also in position to provide training and engage in knowledge transfer with other central banks within the SADC region.