Gold and foreign exchange reserves rose by just 1,8% in November - largely because of the higher gold price and a US$42m increase in SA's holding of "special drawing rights" allocated by the IMF. The gold price surged by 12% during the month, increasing the value of gold reserves to $4,7bn.
The 0,5% increase in the value of foreign exchange holdings (to $32,9bn) suggests that the Reserve Bank has not attempted to buy foreign exchange to weaken the rand. The Bank has stuck to its intent of letting markets determine the level of the currency, despite the strong rand's effects on exports. The increase in foreign reserves is a result of the weaker US dollar.
The international liquidity position (net reserves) rose by 2,1% of $804m to $39,6bn. RMB economist John Cairns says about $500m of this was due to the rise in the gold price, and another estimated US$200m came from currency valuation effects. Net reserves will cover an estimated 6,5 months of imports.
Foreigners were net buyers of domestic assets during November. Net purchases of R12,6bn were made up of equity purchases of R3,1bn and bond purchases of R9,5bn. Cumulative inflows for the year to date rose to R65,9bn from R53,4bn.
Razina Munshi
50,3 points. November's purchasing managers' index rose above the critical 50-point level in November. This is evidence of an expanded view of manufacturing activity for the future.
-12,1 percent y/y. Vehicle sales fell in November, though by less than the 17% drop in the previous month. The drop is consistent with seasonal patterns as consumers tend to postpone purchases until the new year to fix a later registration date.
6 points. Consumer confidence rose in the fourth quarter, from just one point previously. In the area of economic performance, expectations rose from 11 to 16, while consumers expect their own finances to improve, pushing that index up from 15 to 18.
Gold jumped to a record intra day high of US$1 227/oz last Wednesday as declines in the dollar and higher commodity prices enhanced demand for the metal as an inflation hedge. At the end of last week, though, gold plunged nearly $50 after the dollar rallied against a basket of currencies. The dollar rose after a report out of the US showed that employers cut fewer jobs in November than forecast. This heightened speculation that the US Federal Reserve may start hiking interest rates.
The price of Brent crude oil pulled back slightly at the end of last week. The stronger dollar and increased risk aversion dragged prices lower.
In addition, weak demand statistics out of the US, the world's largest energy-consuming nation, added to the downtrend in the price.
According to the US department of energy, US energy demand fell by 3% in the week ended November 27. This brought the decline in US demand for oil to 8% this year. Nonetheless, the oil price is still 65% higher than it was at the start of the year.
Commodities - Copper gains |
Last week, copper for delivery in three months jumped above US$7 000 /t for the first time in 14 months as a weaker dollar and positive economic indicators out of the US and China bolstered prices.
Copper has been the best performer on the LME in 2009, with prices more than doubling since the start of this year. However, we saw a slight dip last week on the stronger dollar.
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