A recent report by the Central Bank of Swaziland's Research department on the possibilities of adopting a dual exchange rate system says that owing to the current low level of external debt exposure and ability to trade freely in the international currency markets, the country's foreign reserves tend not to be strictly matched according to liabilities.
"It has always been the objective of the bank to thrive at optimising the management of the country's reserves," the report states. "However, global volatility of currencies has also made it difficult to achieve the prime objective of the bank in terms of maintenance of value."
"Fiscal indiscipline has also eroded reserves in the past years due to high expenditure by government. The current reserve management strategy is wedged between the ability to earn a return on investment whilst ensuring sufficient reserves to service external obligations in light of a protracted depreciation in the exchange rate."