Namibia’s international reserves increased by N$1.62 billion, or 2.9% month-on-month, to N$58.04 billion at the end of July, driven mainly by higher Southern African Customs Union (SACU) receipts and foreign currency placements by commercial banks, according to IJG Securities.
The reserves increased from N$56.42 billion in June, with currency depreciation and increased gold monetisation providing additional support.
“According to the BoN, the increase was driven by higher SACU receipts and strong Customer Foreign Currency (CFC) placements by commercial banks, with further support from currency depreciation and increased gold monetisation,” IJG said.
The higher reserve position lifted Namibia’s estimated import cover to 3.6 months, rising to 4.0 months when oil and gas-related imports are excluded.
Reserves were equivalent to 10.1 times the value of currency in circulation, providing continued support for the Namibia Dollar’s one-to-one peg to the South African Rand and the country’s short-term external obligations.
Bank of Namibia data showed that the N$58.04 billion in official reserve assets comprised N$53.74 billion in foreign currency reserves, N$3.72 billion in Special Drawing Rights (SDRs), N$573.4 million in gold and N$3.4 million in the country’s reserve position at the International Monetary Fund.
Foreign currency reserves comprised N$40.43 billion held in securities and N$13.31 billion in currency and deposits.
Namibia’s gold reserves were valued at N$573.4 million at the end of July, representing 0.00857 million fine troy ounces valued at US$4,046.15 per ounce.
While the country’s international reserve position strengthened, commercial bank liquidity declined sharply during the month.
Average commercial bank liquidity fell by 32.5% month-on-month to N$6.69 billion in July from N$9.77 billion in June.
“According to the BoN, the decline was mainly due to investment-related outflows, although banks’ cash balances remain comfortably above prudential requirements,” IJG said.
IJG said the increase in international reserves strengthened Namibia’s external liquidity position, while the decline in commercial bank liquidity reflected investment-related outflows during the month.
