Greenback heaviest in reserve basket

Jo-Maré Duddy – The US dollar overtook the rand as the most important currency in Namibia’s foreign reserve basket last year.

According to the Bank of Namibia’s (BoN) latest annual report, the country’s reserves at the end of 2017 totalled N$30.2 billion. About 47.7% or N$14.4 billion was in US dollar, while nearly 47.4% or N$14.3 billion was in South African rand.

Other currencies in the reserve basket were: Euro (about N$745.9 million), yuan (N$262.7 million), pound (N$193.3 million), and yen (N$175.2 million).

International reserves at the end of last year were 22.1% higher than at the end of 2016. The increase stemmed from an inflow in receipts from the Southern African Customs Union (SACU), the first tranche of the loan from the African Development Bank (AfDB) and the repayment of debt by the central bank of Angola (BNA), the BoN says.

The level of foreign reserves at the end of last was considered “adequate”, the BoN says. It was estimated to be 6.5 times higher than the currency in circulation, supporting the adequacy of reserves required to maintain the currency peg to the rand.

“Measured in terms of import coverage, foreign reserves adequacy increased from 3.2 months of imports at the end of 2016 to 4.6 months as at 31 December 2017. This notable improvement presents a coverage ratio higher than the international minimum benchmark of three months,” the BoN says.