159/99
4 October 1999
UK OFFICIAL HOLDINGS OF FOREIGN CURRENCY AND GOLD:
Part I: UK Government Reserves - September 1999
1. The overall level of the UK Government's reserves, including the forward book, fell by $1,038 million in September, bringing the end-September total to $32,650 million (£19,830 million) compared with $33,688 million (£20,948 million) at the end of August.
2. The underlying change in the reserves, including the forward book, was a fall of $1 million.
3. The underlying change excludes capital transactions that are included in the overall change. In September:
- there were repayments of $8 million of Exchange Cover Scheme (ECS) borrowing; and
- capital repayments of Government Euro Treasury Bills maturing exceeded receipts from those issued by $1,066 million.
4. The underlying change also excludes the difference between the valuation of the gold auctioned on 21 September at the "parity" rate of $209.59 per troy ounce and the auction allotment price ($255.75 per troy ounce) amounting to $37 million.
| $ million |
|||
| Spot | Forward | Total | |
| end- September reserves | 32,950 | -300 | 32,650 |
| less | |||
| end- August reserves | 33,708 | -20 | 33,688 |
| OVERALL CHANGE | -758 | -280 | -1,038 |
| less adjustments | 1,037 | 0 | 1,037 |
| UNDERLYING CHANGE | 279 | -280 | -1 |
5. As set out in the Chancellor's letter of 6 May 1997 to the Governor, if the government so instructs then the Bank, acting as its agent, may intervene in the foreign exchange market by buying or selling the government's foreign exchange reserves. If intervention is undertaken, the monthly press release will provide details of the amount and date of the intervention and an explanation of why it was undertaken. No intervention operations were undertaken in September.
- When converted at the closing market rate of £1= $1.6465 on 30 September 1999.
- When converted at the closing market rate of £1=$1.6082 on 31 August 1999.
6. Following the International Monetary Fund's revision to their Special Data Dissemination Standard (SDDS) and the G10 central bank report "Enhancing transparency regarding authorities' foreign currency liquidity position" the United Kingdom has decided to disclose additional information on its foreign currency assets and liabilities. On Friday 24 September 1999 the Bank of England published, on its webpage, data on UK foreign currency liquidity for end-August 1999. The data for end-June 1999 onwards can be found at the Bank of England site at www.bankofengland.co.uk/statistics/reserves.
Part II: Bank of England Holdings of Foreign Currency and Gold - September 1999
7. The overall level of the Bank of England's holdings of foreign currency and gold, including the forward book, rose by $2,169 million in September, bringing the end-September total to $7,532 million (£4,575 million) compared with $5,363 million (£3,335 million) at the end of August.
8. There was no underlying change in the level of the Bank of England's holdings including the forward book.
| $ million |
|||
| Spot | Forward | Total | |
| end-September holdings | 11171 | -3639 | 7532 |
| less | |||
| end-August holdings | 6435 | -1072 | 5363 |
| OVERALL CHANGE | 4736 | -2567 | 2169 |
| less adjustments | -4736 | 2567 | 2169 |
| UNDERLYING CHANGE | 0 | 0 | 0 |
9. 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, changes arising from the UK participation in the TARGET system, changes arising from the Bank's Euro Bill programme, 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. The proceeds of the Bank's Euro Bills will be used to finance the provision by it of intra-day liquidity, on a secured basis, to participants in CHAPS euro, as part of the arrangements for TARGET.
10. The Bank's participation in the TARGET system has given rise to euro balances with other central banks operating the system. These are in effect off-set by similar balances that the other central banks hold at the Bank. As a result they are shown net in the table above, where they account for $124 million. The gross amount is $44,363 million.
11. As set out in the Chancellor's letter of 6 May 1997 to the Governor, the Bank may also undertake foreign exchange operations to intervene in support of its monetary policy objective. If intervention is undertaken, the monthly press release will provide details of the amount and date of intervention and an explanation of why it was undertaken. No intervention operations were undertaken in September.
12. When converted at the closing market rate of £1=$1.6465 on 30 September 1999
13. When converted at the closing market rate of £1=$1.6082 on 31 August 1999
14. Following the International Monetary Fund's revision to their Special Data Dissemination Standard (SDDS) and the G10 central bank report "Enhancing transparency regarding authorities' foreign currency liquidity position" the Bank of England has decided to disclose additional information on its foreign currency assets and liabilities. On Friday 24 September 1999 the Bank of England published, on its webpage, data on UK foreign currency liquidity for end-August 1999. The data for end-June 1999 onwards can be found at Bank of England website.
Notes to Editors
1. The Quarterly Report on UK Official Holdings of Foreign Currency and Gold, to be published on 2 December 1999 and covering the quarter ending 30 September 1999, 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.
2. 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.
3. 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.
4. Repayments under the Exchange Cover Scheme in September were as follows:
| Organisation | $ million |
| Staffordshire County Council | 3.294 |
| South Yorkshire County Council | 0.751 |
| Lancashire County Council | 0.527 |
| West Glamorgan County Council | 0.517 |
| Other Smaller Repayments | 2.878 |
| Total | 7.967 |
5. Under the current accounting methodology valuation of foreign currency and gold is based on "parity" rates fixed annually for the following financial year. The "parity" rate for gold in use during the financial year 1999-2000 is $ 209.59 per troy ounce. The gold sold at the 21 September auction was allotted at $255.75 per troy ounce.
6. The figures for October 1999 will be published on Tuesday 2 November.
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).