The National Bank of Rwanda (BNR) has announced that it has started investing in gold as part of its strategy to diversify its foreign exchange reserves and mitigate the impact of fluctuations in international market prices. This move was revealed by BNR Governor Soraya Hakuziyaremye during the presentation of the Monetary Policy and Financial Stability Statement. According to Hakuziyaremye, investing in gold has proven to be a timely decision, generating returns and allowing the central bank to expand its options for managing and investing its foreign exchange reserves.
The decision to invest in gold was made in July last year, and since then, it has provided the central bank with a return on investment, despite fluctuations in gold prices in recent months. Hakuziyaremye explained that gold is a key instrument used by central banks to diversify their foreign exchange reserves and protect their value against market volatility. The investment in gold has enabled BNR to generate returns, preserve its assets, and reduce its reliance on a single type of asset.
According to Hakuziyaremye, one of the benefits of this policy is that Rwanda's foreign exchange reserves can now cover the country's imports of goods and services for more than four months. The level of foreign exchange reserves is crucial for a country's economy, as it enables the country to pay for imports, withstand potential shocks in the foreign exchange market, and maintain confidence in its ability to meet its external obligations.
Although the exact amount of gold invested by BNR has not been disclosed, Hakuziyaremye stated that the central bank's annual report, which is currently being prepared, will provide detailed information on the investment. The report is expected to be submitted to parliament by October 31st. According to international standards, central banks typically invest between 10% and 15% of their foreign exchange reserves in gold.
The decision to invest in gold was made during a period of significant fluctuations in global gold prices, which has led many central banks to view gold as a valuable asset for managing their foreign exchange reserves. By investing in gold, BNR aims to diversify its assets, generate returns, and protect the value of its foreign exchange reserves.
The central bank's investment in gold is part of its efforts to strengthen its foreign exchange reserves and maintain economic stability. Rwanda's economy has been affected by external shocks, including fluctuations in global commodity prices and exchange rates. By diversifying its foreign exchange reserves, BNR aims to reduce the country's vulnerability to these shocks and maintain confidence in its economic management.
BNR will continue to monitor the performance of its gold investment and other foreign exchange reserve assets, with detailed information on the investment's value expected to be disclosed in the central bank's annual report. The report will provide an update on the investment's returns and its contribution to the country's economic stability.
Key points
- The National Bank of Rwanda starts investing in gold to diversify its foreign exchange reserves.
- The investment in gold has generated returns for the central bank despite fluctuations in gold prices.
- The exact amount of gold invested by BNR will be disclosed in its annual report.
