South African central bank cuts bond buys to 2.5 bln rand in July

PUBLISHED: Fri, 07 Aug 2020 10:41:33 GMT
Share

JOHANNESBURG (Reuters) – The South African central bank further cut its government bond purchases in July, buying 2.5 billion rand ($142 million) worth, or half the amount it bought in June, to bring its total holdings to 38.4 billion rand, data showed on Friday.

Rampant selling of government debt in March and April, as the coronavirus struck, forced the bank into emergency liquidity measures, including a quantitative easing style purchase of bonds in the secondary market.

At its rate meeting two weeks ago, when the bank clipped lending rates by 25 basis points, governor Lesetja Kganyago stressed the bond buying was to support liquidity rather than finance government’s ballooning budget deficit.

In May, National Treasury upped the weekly amount of debt on auction by nearly 2 billion rand.

Local banks and asset mangers have mostly taken up the increased supply, but foreign investors have reduced their holdings to an eight-year low at 30.1%.

($1 = 17.5639 rand)

Sign Up for Our Newsletter Daily Update
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.