RESERVES RISE TO E9.3BN

MBABANE – The country’s gross official reserves are said to have increased to E9.3 billion at the end of the past month.

They were higher than the E8.9 billion observed in the previous month due to net inflows from foreign exchange trades with banks during the month under review. At this level, the reserves represented an increase of 5.3 per cent month-on-month and 3.6 per cent year-on-year. Consequently, the reserves were enough to cover 3.6 months of imports at the end of February 2022, higher than the 3.4 months observed in January.

Special

Valued in special drawing rights (SDR), the reserves amounted to SDR440.4 million at the end of February, increasing by 7.1 per cent over the month under review and 5.8 per cent year-on-year. The traditional rule that has been used to guide reserve adequacy suggest that countries should hold reserves covering 100 per cent of short-term debt or the equivalent of three months worth of imports. Countries use reserves to keep a fixed rate value; maintain competitively priced exports; remain liquid in case of crisis; and provide confidence for investors. They also need reserves to pay external debts; afford capital to fund sectors of the economy; and profit from diversified portfolios.

Meanwhile, banks’ liquid assets are said to have decelerated by 5.7 per cent relative to December last year. However, over the year they improved by 3.1 per cent to settle at E7.9 billion at the end of January this year. The month-on-month decline was attributed to a fall in cash balances held by banks; balances with the Central Bank as well as their investment in government securities.

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