HM Treasury News Release

160/98                                           2 October 1998      

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      UK OFFICIAL HOLDINGS OF FOREIGN CURRENCY AND GOLD: 
                         SEPTEMBER 1998

Part I: UK Government Reserves

The overall level of the UK Government's spot reserves fell by
$7 million in September, bringing the end-September total to
$35,282 million (#20,758 million) compared with $35,289
million (#21,218 million at the end of August).

The underlying change in the reserves was a fall of $1
million.

The underlying change excludes capital transactions that are
included in the overall change.  In September there were
repayments of $6 million of public-sector borrowing for which
the Government has provided an exchange-rate guarantee under
the Exchange Cover Scheme (ECS).

                            $ million
end-September reserves      35,282
less
end-August reserves         35,289
OVERALL CHANGE                  -7
less adjustments                 6
UNDERLYING CHANGE               -1

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 $3,776 million (#2,216 million) at end-
September compared with $5,476 million (#3,292 million) at the
end of August.

                            $ million
end-September holdings      3,766
less
end-August holdings         5,476
OVERALL CHANGE             -1,710

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 a reduction of $2,260 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 August and exclude transactions conducted in the last
two days of September.

   2.The Quarterly Report on UK Official Holdings of Foreign
Currency and Gold, to be published on 2 December 1998 and
covering the quarter ending 30 September 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 September
were as follows:

Organisation                       $ million

South Yorkshire County
Council                            0.681

Civil Aviation Authority           0.557

Highland Regional
Council                            0.480

Lancashire County
Council                            0.477

West Glamorgan County  
Council                            0.472

Other smaller repayments           2.853

Total                              5.520


   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