Sarb reduces bond purchases to R5bn in June

Bond yields have returned to near pre-COVID-19 levels and the rand has recovered from record lows, although that recovery remains fragile.
Image: Moneyweb

The South African central bank reduced its government bond purchases to R5 billion ($292.64 million) in June, half the monthly average, bringing its bond holdings to R35.9 billion, data showed on Tuesday.

The Reserve Bank began a series of emergency liquidity measures in late March to ease the stress on banks and capital markets caused by the coronavirus pandemic. Among them were extra repo auctions and 275 basis points worth of lending rate cuts.

The bank has since slowed those support measures as local financial markets recovered, resisting calls from labour and some economists to resort to full-blown quantitative-easing-style funding of government’s gaping budget deficit.

The bank’s June statement of assets and liabilities showed its accommodation to commercial banks via repurchase, or repo agreements, had fallen to R60 billion in June from 73.5 billion in the previous month.

In May, the central bank reduced overnight repo auctions to one per day from the two it implemented to pump liquidity to commercial banks.

Bond yields have returned to near pre-COVID-19 levels and the rand has recovered from record lows, although that recovery remains fragile with the economy contracting for the consecutive time in the first quarter.

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When is the SARB going top give each household R100k or each citizen over 18 but under 65 R25k? Much as this could sound like an unthinkable exercise imagine what it could do for a country hit by COBID 19.

Nothing. Prices will go up as the money will be spent and not invested. One month later and we’re almost back where we started.

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