UK OFFICIAL HOLDINGS OF FOREIGN CURRENCY AND GOLD: MARCH 1998

Part I: UK Government Reserves

The overall level of the UK Government's spot reserves fell by $6 million in March, bringing the end-March total to $36,527 million (21,814 million Pounds) compared with $36,533 million (22,199 million Pounds) at the end of February.

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

The underlying change excludes factors that are included in the overall change. In March:

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); and

receipts from Government ECU Treasury bills issued exceeded repayment on those maturing by $1 million.

	$ million
end-March reserves	36,527
less
end-February reserves	36,533
OVERALL CHANGE	-6
less adjustments	5
UNDERLYING CHANGE	-1

After the annual revaluation, the reserves stood at $34,219 million (20,435 million Pounds).

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 $2,961 million (1,768 million Pounds ) at end-March compared with $6,660 million (4,047 million Pounds) at the end of February.

	$ million
end-March holdings	2,961
less
end-February holdings	6,660
OVERALL CHANGE	-3,699

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 decrease of $3,729 million in the Bank's spot holdings due to the net effect of foreign-exchange swaps conducted in the first quarter of 1998 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.

NOTES FOR 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 February exclude transactions conducted in the last two days of March.

2. The Quarterly Report on UK Official Holdings of Foreign Currency and Gold, to be published on 2 June 1998 and covering the quarter ending 31 March 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 authorities. 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 March were as follows:

Organisation	$ million
South Yorkshire County Council	0.689
Western Isles Regional Council	0.666
Civil Aviation Authority	0.594
Highlands Regional Council	0.518
West Glamorgan Regional Council	0.480
Lancashire County Council	0.469
Other smaller repayments	2.361
Total	5.776

6. The Government's reserves are conventionally revalued once a year at the end of March as follows:

gold is valued at 75 per cent of the average of the London fixing price for the three months up to the end of March or at 75 per cent of its final fixing price on the last working day in March, whichever calculation gives the lower value; and

nondollar foreign currencies, Special Drawing Rights (SDRs) and European Currency Units (ECUs) are converted to dollar equivalents using the average of the relevant dollar exchange rates in the three months up to the end of March or using the actual exchange rates on the last working day in March, whichever calculation gives the lower dollar value.

7. The same gold price and exchange rates are then used to value the Government's reserves in successive monthly reserves announcements until the next revaluation. Securities are revalued at historic cost but translated into dollars as set out above.

8. 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