Currency in circulation at N$4.9 billion in August

As at 28 August 2023, foreign exchange reserves were ten times more than the currency in circulation (CIC). International reserves stood at N$53.1 billion, while the currency in circulation was recorded at N$4.9 billion.These figures were revealed by the Bank of Namibia’s (BoN’s) spokesperson Kazembire Zemburuka upon a Market Watch enquiry on the minimum level of foreign exchange reserves required to maintain the one-to-one link between the Namibia dollar and the South African rand.Zemburuka pointed out that the member states in which the South African rand circulates should maintain foreign reserves equal or in excess of the currency in circulation.The members of the Common Monetary Area (CMA) include South Africa, Namibia, Lesotho and Eswatini.The minimum intervention threshold at which the level of foreign reserves shall be considered inadequate is defined as the foreign reserves falling short of the following coverage ratios: (1) Currency in circulation plus a 12-month average of cross-border transfers or (2) three months’ worth of imports. Foreign exchange reserves are considered adequate even on this stricter measure. As of 28 August 2023, the ratios stood at 6.4 and 5.5 months, respectively.“The minimum foreign exchange reserves required to maintain the peg between the Namibia dollar and South African rand is set out in the Common Monetary Area agreement signed between member countries,” Zemburuka added.According to the Namibia Statistics Agency (NSA), July recorded a 17.8% increase in the import bill to N$11.9 billion from N$10.1 billion registered in June.Petroleum oils topped the list of imported goods in July, with a share of 15.3% of the total import value. They were mostly sourced from Oman and Saudi Arabia.High costs of key import items pose a risk to the Bank of Namibia’s economic growth forecast of 3.3% in 2023. The Ministry of Mines and Energy last week announced an increase in fuel prices.Meanwhile, during July 2023, Namibia’s export earnings decreased by 3.8% from N$8.6 billion recorded in June to N$8.3 billion. Diamonds were Namibia’s largest exported commodity in July 2023.As a result, the trade deficit worsened to N$3.7 billion in July, compared to a trade deficit of N$1.5 billion recorded in June 2023. -phillep@nmh.com.na

Currency in circulation at N$4.9 billion in August

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Currency in circulation at N$4.9 billion in August

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