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Reserves are managed using an enhanced indexation strategy. This is a hybrid between active and passive management that suits the Bank's conservative objectives. Performance measurement and risk monitoring are carried out on all the portfolios on a daily and monthly basis.
Risk considerations are a key theme running through all reserves management decisions. Risk management is largely based on detailed investment guidelines, limiting the markets and securities in which portfolios can be invested, as well as the currency exposures and deviations of duration from the benchmark portfolios. The purpose of risk management emanating from reserves management operations is to protect the value of the country’s gold and foreign exchange reserves against adverse market conditions, while opportunistically taking positions to enhance returns.
Reserves management practices at the Bank are aligned to the guidelines for foreign exchange reserve management released by the International Monetary Fund (IMF) in September 2001: Guidelines for Foreign Exchange Reserve Management, which outlines sound reserve management practices for member countries.