SA reassures as fear grips markets

Johannesburg - The Reserve Bank sees no reason to make any significant changes in the make-up of its foreign currency reserves, it said on Monday.

“The South African Reserve Bank is monitoring the developments as they unfold. At this stage, we see no reason to make any significant changes to both the currency composition of foreign exchange reserves and reserves management operations,” it said in a written response to questions from Reuters.

In a separate statement, Finance Minister Pravin Gordhan and Reserve Bank governor Gill Marcus said they had held discussions with the Financial Stability Oversight Committee on the effect of the US debt downgrade and the sovereign debt crisis in Europe on SA's financial stability.

The National Treasury and Reserve Bank would monitor the situation and were poised "to mitigate" risks and adverse effects on the economy, they said.

"South Africa has deep and liquid financial markets which continue to function even during this difficult time of global financial turmoil, " they said, adding that all rating agencies ranked South Africa at an investment grade.

"Standard & Poor’s in particular, affirmed South Africa’s sovereign rating and even revised the rating outlook from negative to stable. These ratings are a testimony to our sound management of the economy and public finances, and demonstrate confidence in our fiscal consolidation measures," they said.

SA's financial system remained strong, had adequately capitalised institutions and was supported by a robust regulatory framework, they said.

As a member of G20 it would remain in close contact with other member countries ready to take action to ensure stability and liquidity in financial markets.