HM Treasury News Release  

132/98                                             4 August 1998
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  UK OFFICIAL HOLDINGS OF FOREIGN CURRENCY AND GOLD: JULY 1998

Part I: UK Government Reserves

The overall level of the UK Government's spot reserves rose by
$502 million in July, bringing the end-July total to $35,294
million (#21,580 million [1]) compared with #34,792 million 
($20,867 million [2] at the end of June).

There was no underlying change in the reserves.

The underlying change excludes capital transactions that are
included in the overall change.  In July:

         there were repayments of $1 million of public-sector
          borrowing for which the Government has provided an
          exchange-rate guarantee under the Exchange Cover
          Scheme (ECS);

         receipts from Government ECU and Euro Treasury bills
          issued exceeded capital repayments on those maturing
          by $1 million;

         revaluation arising from EMI swaps resulting in a
          decrease of $38 million; and

         receipts from Government Euro Treasury notes issued
          of $541 million. 


                             $ million


end-July reserves            35,294
less
end-June reserves            34,792

OVERALL CHANGE                  502

less adjustments               -502

UNDERLYING CHANGE                 0

Part II: Bank of England Holdings of Foreign Currency and Gold

The level of the Bank of England's spot holdings of foreign
currency and gold was $5,255 million (#3,213 million [3]) at end-
July compared with $1,659 million (#995 million [4]) at the end of
June.


                          $ million

end-July holdings           5,255
less
end-June holdings           1,659

OVERALL CHANGE              3,596


The change in the Bank's holdings includes changes in foreign-
currency and gold deposits placed with the Bank by overseas
central banks and other customers, and the change in valuation
over the month.

The change also includes an increase of $3,297 million in the
Bank's spot holdings due to the net effect of foreign-exchange
swaps conducted in the course of the Bank's money-market
operations. These foreign exchange swaps are undertaken as a
supplement to the Bank's usual money market techniques to
provide sterling liquidity to the market.  The operations are
purely technical in nature and have no monetary policy
significance; they are likely to be used from time to time in
the future, depending on market conditions.

Notes to Editors

   1.Due to the two-day settlement lag in the foreign-exchange
market, both the UK Government figures and the Bank of England
figures include transactions conducted in the last two working
days of June and exclude transactions conducted in the last
two days of July.

   2.The Quarterly Report on UK Official Holdings of Foreign
Currency and Gold, to be published on 2 September 1998 and
covering the quarter ending 30 June 1998, will contain further
information about the foreign-currency and gold holdings of
the Government and the Bank of England.  This will include,
for each, the size of the forward foreign-exchange position,
the currency composition of foreign-currency assets, the size
and currency composition of foreign-currency liabilities and
information on intervention operations, if undertaken.

   3.The Government and Bank of England figures have been
produced on the basis of different accounting methodologies. 
Therefore, no overall total for the two is shown.  Details of
the accounting methodologies were included in the Quarterly
Report published on 3 March 1998 (covering October-December
1997) and will be included in future Quarterly Reports.

   4.The underlying change in the Government's reserves is the
result of a variety of transactions, both debits and credits,
including, for example, transactions for Government
departments, transactions with other central banks and
interest receipts and payments.  For these reasons, the
underlying change should not be taken as an indication of
market intervention.

   5.Repayments under the Exchange Cover Scheme in July were
as follows:


Organisation                     $ million

Bradford County Council          0.484

Edinburgh City Council           0.416

Tameside Metropolitan
Council                          0.396

Cornwall County Council
repayments                       0.203

Total                            1.499


   6.The figures contained in this press release can also be
obtained from the Reuters Monitor (page TREA), Bridge News
(page 170), Telerate (p22494) and Topic (p6800).

   7.If you have access to the Internet, you can find this
information at http://www.hm-treasury.gov.uk and at
http://www.bankofengland.co.uk.


# = pounds sterling