UK OFFICIAL HOLDINGS OF FOREIGN CURRENCY AND GOLD - JANUARY 1998

Part I: UK Government Reserves

The overall level of the UK Government's spot reserves fell by $1,875 million in January, bringing the end-January total to $36,543 million (22,350 million Pounds) (see footnote ¹) compared with $38,418 million (23,350 million Pounds) (see footnote ²) at the end of December.

The underlying change in the reserves decreased by $6 million.

The underlying change excludes a number of factors which are included in the overall change:

there were repayments of $1 million of public sector borrowing for which HMG has provided an exchange rate guarantee under the Exchange Cover Scheme (ECS);
revaluation arising from EMI swap resulting in a reduction of $99 million
HMG ECU Treasury Bills issued exceeded maturities by $1 million;
repayments on HMG ECU Treasury Notes maturing exceeded receipts from those issued by $1,769 million;

	$ million (see footnote ³)
End January reserves	36,543
less
End December reserves	38,418
OVERALL CHANGE	-1,875
less adjustments	1,868
UNDERLYING CHANGE	6

1. When converted at the closing market rate of 1Pound = $1.6350 on 30 January 1998
2. When converted at the closing market rate of 1Pound = $1.6453 on 31 December 1997
3. Figures are subject to rounding

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 $3,398 million (2,078 million Pounds) (see footnote ⁴) at end January, compared with $1,755 (1,067 Pounds)(see footnote ⁵) at the end of December.

	$ million (see footnote ⁶)
End January holdings	3,398
less
End December holdings	1,755
OVERALL CHANGE	1,643

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

Additionally, there was an increase of $1619 million in the Bank's spot holdings due to foreign exchange swaps conducted in January in the course of the Bank's money market operations. These foreign exchange swaps were 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. The spot currency holding arising from the swap is matched by an equivalent forward sale of currency.

4. closing market rate of 1Pound = $1.6350 on 30 January 1998
5. When converted at the closing market rate of 1Pound = $1.6453 on 31 December 1997
6. Figures are subject to rounding

NOTES FOR EDITORS

1. Due to there being a two day settlement lag in the foreign exchange market, both the UK government figures and the Bank of England figures include transactions done in the last two working days of December, and exclude some transactions done in the last two days of January.

2. The Quarterly Report on UK Official Holdings of Foreign Currency and Gold, to be published on 3 March 1998 and covering the quarter ending 31 December 1997, will contain further information of the foreign currency and gold holdings of the Government and of 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 figures and the 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 2 December 1997, and will be included in subsequent 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 January were as follows:

Organisation	$ million
Lothian Regional Council	0.396
Tameside Borough Council	0.401
Bradford County Council	0.492
Cornwall County Council	0.200
TOTAL	1.489

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).

Press Notices 1998 January to June index