HM Treasury News Release
181/98 3 November 1998
--------------------------------------------------
UK OFFICIAL HOLDINGS OF FOREIGN CURRENCY AND GOLD
The Government's drive towards greater openness in economic
policy making took another step forward today with publication
of the first comprehensive monthly report on the UK's holdings
of foreign currency and gold.
The report shows for the first time on a monthly basis the
size of the UK s forward foreign exchange position. And should
intervention in the foreign exchange market be undertaken the
report will provide an explanation.
Information on the UK's forward book is being published
following the G22 Report on Transparency and Accountability.
In welcoming the Report the Chancellor announced on 5 October
that information on the forward book would be published on a
monthly rather than quarterly basis.
On publication of this monthly information of the forward book
the Economic Secretary, Patricia Hewitt said:
"This marks another key step in the Government's drive
towards greater openness in economic policy making.
"Greater openness improves the quality of economic
decisions, strengthens their legitimacy and credibility,
and reduces the likelihood of unpredictable and
counterproductive reactions in financial markets."
UK OFFICIAL HOLDINGS OF FOREIGN CURRENCY AND GOLD:
Part I: UK Government Reserves - October 1998
The overall level of the UK Government's reserves including
the forward book rose by $542 million in October, bringing the
end-October total to $37,099 million (#22,146 million)
compared with $36,557 million (#21,508 million) at the end of
September.
There was no underlying change in the reserves including the
forward book.
The underlying change excludes capital transactions that are
included in the overall change. In October
there were repayments of $8 million of Exchange
Cover Scheme (ECS) borrowing;
receipts from Government ECU and Euro Treasury Bills
issued exceeded
capital repayments on those maturing by $1 million;
receipts from Government Euro Notes issue of $549
million; and
revaluation arising from the EMI swaps resulting in
a fall of $323 million in the spot reserves and a
rise of $323 million in the forward book.
$ million
Spot Forward Total
end-October reserves 35,504 1,595 37,099
less
end-September reserves 35,282 1,275 36,557
OVERALL CHANGE 221 320 542
less adjustments -219 -322 -542
UNDERLYING CHANGE 2 -2 0
No intervention operations were undertaken in October.
Part II: Bank of England Holdings of Foreign Currency and Gold
- October
The overall level of the Bank of England's holdings of foreign
currency and gold, including the forward book, rose by $87
million in October, bringing the end-October total to $ 2,836
million (#1,693 million) compared with $2,749 million (#1,617
million) at the end of September.
There was no underlying change in the level of the Bank of
England's holdings including the forward book.
$ million
Spot Forward Total
end-October holdings 7,895 -5,059 2,836
less
end-September holdings 3,766 -1,017 2,749
OVERALL CHANGE 4,129 -4,042 87
less adjustments -4,129 4,042 -87
UNDERLYING CHANGE 0 0 0
The adjustments to the overall change figure include the
change in valuation over the month, changes in holdings
arising from changes in foreign currency and gold deposits
placed with the Bank by overseas central banks and other
customers, changes due to the net effect of foreign exchange
swaps conducted in the course of the Bank's money market
operations, and other capital items. The foreign exchange
swaps are undertaken as a supplement to the Bank's usual money
market techniques to provide sterling liquidity to the market,
and are purely technical in nature.
No intervention operations were undertaken in October.
NOTES TO EDITORS
1.As announced by the Chancellor of the Exchequer on 5
October 1998 information on both the spot and forward books of
the UK Official Reserves will be reported on a monthly rather
than quarterly basis.
2.Part I provides information on the spot reserves for
October 1998. 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 September and exclude
transactions conducted in the last two days of October.
3.The Quarterly Report on UK Official Holdings of Foreign
Currency and Gold, to be published on 2 March 1999 and
covering the quarter ending 31 December 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 currency composition of foreign-
currency assets, the size and currency composition of foreign-
currency liabilities and information on intervention
operations, if undertaken.
4.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.
5.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.
6.Repayments under the Exchange Cover Scheme in October
were as follows:
Organisation $ million
Strathclyde Regional Council 3.811
Lothian Regional Council 1.160
Tayside Regional Council 0.561
Fife Regional Council 0.466
Other smaller repayments 1.971
Total 7.968
7.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).
8.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