South Africa’s reserves lose March momentum

South Africa’s net foreign reserves fell to $73.19 billion at the end of March from $75.84 billion in February, as the country’s gross reserves also dropped to $77.76 billion from $81.06 billion, according to central bank data released on Thursday. The decline came after a stronger February reading and marks a pullback from levels that had been supported earlier this year by higher reserve values and foreign-exchange purchases.

The March figures matter because foreign reserves are a key buffer for any open economy exposed to swings in commodity prices, global capital flows and exchange-rate volatility. For South Africa, they serve as a first line of defence against external shocks, help the monetary authorities manage liquidity, and reassure investors about the country’s ability to meet foreign-currency obligations even during periods of market stress. The South African Reserve Bank says reserve changes can be driven by the dollar gold price, asset-price movements, foreign-exchange purchases and payments made on behalf of government.

March was a difficult month for emerging-market assets, and South Africa was not spared. The rand was on course to end March more than 6% weaker against the dollar after a sell-off linked to the Iran war and wider investor unease over energy prices and global risk appetite. A softer domestic currency can sometimes lift the rand value of assets, but the central bank reports reserves in dollars, meaning shifts in the gold price, foreign-currency holdings and market valuations can all reshape the monthly picture.

Gold also appears to have played a role in the latest movement. Central bank notices for earlier months showed February reserve gains were helped by a rise in the US dollar gold price, asset-price moves and foreign-exchange purchases, partly offset by government payments. By early April, bullion had lost more than 10% from the levels seen before the Iran conflict, reflecting a stronger dollar, inflation concerns and shifting expectations on interest rates. That backdrop suggests the reserve decline in March was not simply a sign of domestic weakness, but part of a broader repricing across global markets.

Even so, the fall in March does not erase the broader improvement seen over a longer horizon. February’s net foreign reserve figure of $75.84 billion was above January’s $74.88 billion, while January gross reserves had reached just over $80.19 billion, among the strongest readings in the available series. The latest data therefore points more to a month-on-month correction than to a collapse in the country’s external liquidity position. That distinction is important for markets trying to separate normal valuation swings from signs of structural strain.

The macroeconomic backdrop remains mixed. On one hand, the central bank left its main lending rate unchanged at 6.75% in March, arguing that caution was needed as higher energy prices linked to the Middle East conflict threatened to push inflation higher. On the other, the Reserve Bank’s March Quarterly Bulletin showed South Africa’s trade surplus widened sharply in the fourth quarter of 2025, helped by stronger merchandise and net gold exports and lower imports. Those trade dynamics offer some support to the country’s external accounts even as financial markets remain volatile.

For investors, the significance of Thursday’s data lies less in the absolute level of the fall than in what it says about South Africa’s exposure to fast-moving global conditions. Reserve trends are being shaped not only by domestic policy, but also by oil-price shocks, dollar strength, bullion swings and the behaviour of global funds toward emerging markets. That leaves the rand and reserve stock sensitive to events far beyond Pretoria and Johannesburg, especially while geopolitical tensions continue to ripple through commodity and currency markets.