Gold is one of the most coveted and valuable metals globally, playing pivotal roles in finance, industry, and art while symbolizing wealth and prestige. Governments across the world amass gold in their reserves as either a store of value or a risk diversification asset. The reserves are managed by the central banks. This practice serves to preserve the value of their foreign reserves and reduce dependency on assets like foreign currencies or government bonds.
Gold reserves provide stability and liquidity, acting as a buffer for a nation’s currency during challenging times. Unlike paper currencies susceptible to inflation and global economic shocks, gold’s value remains relatively steady, making it a dependable asset.
The earth is rich in natural resources, distributed across the globe in measures. While one country may possess vast crude oil deposits, another could boast extensive reserves of cobalt and copper. In the case of gold, some nations possess substantial natural deposits, while others hold significant reserves. This article explores the currency performance of African countries with the largest gold reserves as of June 2023.
1# Algeria (174 tonnes)
As of June 2023, Algeria held the highest gold reserves in Africa, estimated at 174 tons, according to data from Trade Economics. Notably, Algeria’s gold reserves remained stable at 173.56 tonnes in the second quarter of 2023, consistent with the first quarter.
The Algerian Dinar, the official currency of North Africa, has maintained relative stability compared to its regional counterparts. At the beginning of the year, it traded at 137.168 DZD/$1, but it has since decreased to 137.4079 DZD/$1.
2# Egypt (126 tonnes)
Egypt ranks second among African nations with the highest gold reserves, holding 126 tonnes as of June 2023. In the second quarter of 2023, Egypt increased its gold holdings from 125.63 tonnes in the first quarter.
In contrast to the Algerian Dinar’s stability, the Egyptian pound has faced turbulence throughout the year due to rising inflation. Projections suggest that the Egyptian pound may lose nearly 20% of its value by the end of 2023. It began the year at 24.751 EGP/$1 and currently trades at 30.8976 EGP/$1.
3# South Africa (125 tonnes)
South Africa ranks third among African countries with the highest gold reserves, which increased to 125.41 tonnes in the second quarter of 2023, up from 125.38 tonnes in the first quarter.
Despite grappling with high inflation in recent months, South Africa’s annual consumer inflation dropped to 4.7% in July, the lowest since July 2021 when it stood at 4.6%. Additionally, the South African Rand, which traded at R17.3851/$1 at the beginning of the year, now trades at R19.1769/$1.
4#Libya (117 tonnes)
Libya possesses Africa’s fourth-largest gold reserve, with an estimated 117 tonnes as of June. Libya’s gold reserves remained steady at 116.64 tonnes in both the first and second quarters of 2023.
Two years ago, Libya devalued its currency, the dinar, at a rate of US$1 = LD 4.48 for all transactions to unify the exchange rates. However, as of this year, the dinar has experienced a significant decrease, trading at LD4.87496/$1, compared to LD4.75230/$1 in January.
Recent challenges, such as the Mediterranean flood, have further strained Libya’s economy.
5#Morocco (22.12 tonnes)
Morocco, while holding the fourth-largest gold reserve in Africa, significantly lags behind Libya with an estimated 22.12 tonnes. This figure remained unchanged throughout the first quarter of 2023.
Morocco, known as one of Africa’s leading tourism destinations, has enjoyed relative currency stability in the current year. The US dollar to Moroccan Dirham (MAD) exchange rate started the year at 10.210 MAD/$1 and stood at 10.285 MAD/$1 as of September 27th.