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.

	Spot	Forward	$ million Total
end-October reserves	35504	1595	37099
less
end-September reserves	35282	1275	36557
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

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 (#1,617million) at the end of September.

There was no underlying change in the level of the Bank of England's holdings including the forward book.

	Spot	Forward	$ million Total
end-October holdings	7895	-5059	2836
less
end-September holdings	3766	-1017	2749
OVERALL CHANGE	4129	-4042	87
less adjustments	-4129	4042	-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 on both the Treasury and the Bank of England site.

Press Notices 1998 July to December Index