. no doubt, future challenges lie ahead in what remains an unusually uncertain global financial environment. yet i trust that the spirit of co - operation that we have developed in our financial markets over the years will help us to successfully meet these challenges. i also would like to extend thanks to my own colleagues, the management and staff of the financial markets department. their hard work and dedication during a rather challenging year for the department has been exemplary. they continue to make the reserve bank and the country proud. i would also like to thank colleagues from other departments within the sarb, many of which are present tonight, who work closely with the financial markets department on a daily basis. thank you also to the staff of the reserve bank ’ s conference centre for once again arranging this function for us. thank you. bis central bankers ’ speeches

of the twelve months to april 2012, and despite a hefty selloff in september 2011, the cumulated net purchases amounted to r74, 5 billion. in comparison, the previous calendar - year record in 2006 stood at r34, 3 billion. in recent weeks, the announcement of the possible inclusion of south africa into the world government bond index later this year, has provided some impetus to the local currency bond market and non - resident inflows. this is a positive development as the criteria for inclusion is based on the level of sophistication of our bond markets with regard to size, credit quality and lack of barriers to entry, as well as on its liquidity and a transparent price discovery process. this represents another endorsement of south africa ’ s financial markets as being world - class. other financial assets, however, have experienced a more volatile environment over the past year. equity prices, as measured by the jse all - share index, failed to post any gain over the whole of 2011 despite a recovery in the latter part of the year. furthermore, a continuation of the late 2011 rally into early 2012 quickly lost steam, bearing testimony to continued investor concerns about any speedy return to solid economic growth. in contrast to positive inflows into bonds, net non - resident activity into local equities has resulted in net sales of r25, 4 billion in the twelve months to april 2012. the exchange rate of the rand, while not repeating the wild gyrations of earlier financial crises, has remained vulnerable to shifts in global risk appetite and swings in commodity prices. following relative stability in the first half of 2011, the currency weakened beyond r8. 00 / us $ in september as foreign investors sold domestic bonds, and even the resumption of bond purchases in the ensuing months failed to bring the rand back to its previous range. the past few months have again been a period of moderate volatility, with the rand seemingly driven – as with other so - called “ commodity currencies ” and emerging market currencies – by the countervailing forces of abundant global central bank liquidity, fledgling investor appetite for risk and movements in the eur / usd exchange rate. bis central bankers ’ speeches 4. financial market operations the management of overall money - market liquidity continues to be one of the most important functions of the financial markets department ( fmd ) as part of the implementation of the monetary policy decisions of the mpc. the bank continuously reviews