find themselves in a somewhat challenging position, as they now would have to concentrate on appropriate exit strategies such that the growth in their balance sheets do not pose a huge inflationary risk. there are also the “ expectations effects ”, where these expanding balance sheets may be perceived to signal less commitment to fighting inflation. i am happy to state, however, that in south africa it has been “ business as usual ”. the financial markets department has not had to undertake any special liquidity - providing transactions in the market. the domestic banking sector and financial markets, especially the interbank market, continued to operate effectively during the crisis. there was no upward pressure on overnight rates as witnessed in the us and european markets. the spread between the south african benchmark overnight rate on deposits ( sabor ) and the bank ’ s repo rate remained relatively stable. this spread continued to fluctuate in its usual range, with the sabor remaining below the repo rate. the liquidity requirement remained in a range of between r8 billion and r13 billion, in line with that prevailing the previous year. typically, the purchases of foreign exchange for purposes of building reserves would be the single biggest contributor to increased liquidity in the money market and the sarb would have to drain this liquidity through various open market operations. in the 2008 / 09 financial year, sarb activities in the foreign exchange market were somewhat muted, however, as compared to previous years. this can partly be attributed to the extreme volatility in financial markets. the sarb and national treasury continue to cooperate in an effort to reduce the country ’ s external vulnerability and increase the level of reserves. the gross gold and foreign exchange reserves declined marginally from usd34, 3 billion in april 2008 to usd34, 1 billion in march 2009. although the sarb purchased over usd1, 5 billion in foreign exchange for purposes of increasing the country ’ s foreign exchange reserves, this was offset by valuation adjustments, given that the country ’ s reserves are denominated in various currencies. the sarb did not at any time intervene in the currency markets to influence the level of the rand in any way. the international liquidity position increased marginally, owing to the sarb ’ s decision to reduce its foreign loans. the substantial increase in reserves over recent years, reduced the need to hold significant amounts of borrowed reserves. foreign loans declined from over usd1, 0 billion in april 2008 to approximately usd650 million in march 2009

measured in usd. the strategic asset allocation ( saa ) was reviewed during 2008 / 09, while the sarb also embarked on the external fund management review, which is conducted every three years. the revised saa will be implemented later this year, coinciding with the appointment of new external fund managers and / or reappointment of some existing ones. 4. other initiatives in the financial markets arena the hard work and determination of the planning committee of the association cambiste internationale ( aci ) – now known as aci the financial markets association – is much in evidence and i am happy to report that the 48th annual aci international world conference held in cape town in march 2009 was a resounding success. the south african reserve bank is proud to have been associated with an event of this calibre, the first aci conference to be hosted on the african continent. the sadc financial markets subcommittee is now operational and has met twice in the past year. at its most recent meeting in may 2009, the committee of central bank governors approved the work programme of the subcommittee and in fact the committee holds its third currency composition of foreign exchange reserves ( cofer ), imf. meeting in lesotho starting tomorrow. we wish them every success in their efforts at building and developing financial markets in africa. 5. conclusion it has certainly been a very trying year for financial market participants and indeed, central banks around the world. we certainly seek evidence of the existence of the “ green shoots of recovery ”. i wish to thank you all for the close relationship, we as the central bank, enjoy with you. we certainly value the interactions and i trust that the channels of communication will be enhanced further. from our side, we will endeavour to keep you informed of the strategic and operational issues with which we are involved. i also wish to thank the financial markets department, under the leadership of roelf, for the hard work and determination throughout the year and for making us proud to be associated with the sarb. with them, it is i think appropriate to congratulate your former colleague, daniel mminele, upon his appointment as deputy governor of the south african reserve bank. please enjoy the rest of your evening!