Nam’s zigzagging foreign reserves
Namibia’s foreign reserves continue their inconsistent rise and fall trend because of several factors.
NDAMA NAKASHOLE
Namibia’s international reserves rose to N$29.6 billion at the end of June 2018, from N$28.2 billion at the end of May 2018.
According to the Bank of Namibia’s latest Money and Bank Statistics report, the rise mainly stemmed from payments received from Banco Nacional de Angola, interest received on investments, rand seigniorage and exchange-rate fluctuations.
Contributions
Apart from the repayment of US$51.1 million (N$700 million) by Banco Nacional de Angola, the breakdown of other major contributors to this increase is as follows: Interest received on investments contributed N$351.82 million; rand seigniorage N$179.36 million and exchange rate fluctuations N$918 million. The latter is as a result of the Namibia dollar depreciating against major currencies during the review period, according to BoN’s deputy director of cooperate communications, Kazembire Zemburuka.
PSG Namibia’s commentary on the latest figures says the Namibia dollar depreciated to N$13.7 to the US dollar at the end of June from N$12.5 to the US dollar at the end of the previous month, which boosted the local currency value of US dollar reserves.
“Firstly, it is important to note that the movement in the level of foreign exchange reserves is driven by changes in Balance of Payments items. For reporting purposes, foreign reserves are often translated into Namibia dollars (NAD). As a result, the fluctuations in the Namibia dollar versus other major currencies may also cause the level of foreign reserves to change,” Kazembire told Market Watch on query.
Support
PSG Namibia further says that a sufficient foreign currency buffer is required to ensure Namibia can meet its international financial obligations.
Foreign reserves are needed to support the Namibian currency in circulation as required by the Common Monetary Area (CMA) agreement, says PSG.
“According to the BoN’s most recent monetary policy statement, the stock of foreign reserves at the end of May was projected to cover 4.7 months of imports of goods and services, which is an acceptable level,” says PSG, adding that foreign reserve stocks will come under pressure this year due to a higher import bill and lower Southern African Customs Union (Sacu) revenue.
“Although the Banco Nacional de Angola repayments have now ended, foreign reserves will receive some temporary respite from more African Development Bank loan inflows over the course of 2018 and 2019,” the PSG report states.
Namibia’s international reserves rose to N$29.6 billion at the end of June 2018, from N$28.2 billion at the end of May 2018.
According to the Bank of Namibia’s latest Money and Bank Statistics report, the rise mainly stemmed from payments received from Banco Nacional de Angola, interest received on investments, rand seigniorage and exchange-rate fluctuations.
Contributions
Apart from the repayment of US$51.1 million (N$700 million) by Banco Nacional de Angola, the breakdown of other major contributors to this increase is as follows: Interest received on investments contributed N$351.82 million; rand seigniorage N$179.36 million and exchange rate fluctuations N$918 million. The latter is as a result of the Namibia dollar depreciating against major currencies during the review period, according to BoN’s deputy director of cooperate communications, Kazembire Zemburuka.
PSG Namibia’s commentary on the latest figures says the Namibia dollar depreciated to N$13.7 to the US dollar at the end of June from N$12.5 to the US dollar at the end of the previous month, which boosted the local currency value of US dollar reserves.
“Firstly, it is important to note that the movement in the level of foreign exchange reserves is driven by changes in Balance of Payments items. For reporting purposes, foreign reserves are often translated into Namibia dollars (NAD). As a result, the fluctuations in the Namibia dollar versus other major currencies may also cause the level of foreign reserves to change,” Kazembire told Market Watch on query.
Support
PSG Namibia further says that a sufficient foreign currency buffer is required to ensure Namibia can meet its international financial obligations.
Foreign reserves are needed to support the Namibian currency in circulation as required by the Common Monetary Area (CMA) agreement, says PSG.
“According to the BoN’s most recent monetary policy statement, the stock of foreign reserves at the end of May was projected to cover 4.7 months of imports of goods and services, which is an acceptable level,” says PSG, adding that foreign reserve stocks will come under pressure this year due to a higher import bill and lower Southern African Customs Union (Sacu) revenue.
“Although the Banco Nacional de Angola repayments have now ended, foreign reserves will receive some temporary respite from more African Development Bank loan inflows over the course of 2018 and 2019,” the PSG report states.
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