The Reserve Bank says it may invest up to $1.5 billion or about 3% of South Africa's official gold and foreign exchange reserves, in China.(SABC)
The South African Reserve Bank is following in the footsteps of its Brazil, Russia, India, China (BRIC) counterparts. On Tuesday, the central bank announced that it would begin to diversify its foreign reserves to include more than just euros, dollars and gold in its coffers.
It wants to also start collecting Chinese Renminbi, South Korean won as well as Australian and New Zealand dollars. The reserve bank says it may invest up to $1.5 billion or about 3% of South Africa's official gold and foreign exchange reserves in China.
Analysts say it’s not an unusual move and it reflects countries trading relations. "Somebody like South Africa will look at its global trading partners and keep a basket of currencies that more accurately reflect how they trade with their global partners. But that will only be a small percentage, you’ll still see the dollar being our significant portion of reserves," says financial analyst, La'eeq Van Heerden.
The bank says it has also begun taking steps to protect its reserves against the risks of being exposed to one or two asset classes only.