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16/02

5 March 2002

UK Official Holdings of International Reserves:

Part I: UK Government Foreign Currency Assets and Liabilities - February 2002

1. The UK Government's net reserves rose by $190 million in February, bringing the end-February total to $13,551 (£9,582 million1) compared with $13,361 (£9,452 million2) at the end of January.

US $ million: market values
end January 2002 end February 2002

Gross Reserves3

 37,296 38,541

Liabilities

 -23,934 -24,990

of which
foreign currency forwards and swaps (net)4 -15,656 -16,196
repo transactions5 -449 -750
Net reserves6
 13,361 13,551
Change in net reserves
 190
of which
valuation effects 194
transactions against sterling -4
of which
UK public sector customers -205
Other 202


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Revisions to previously published figures

2. The previously published end-month figures for the UK Government's reserves of foreign currency and gold for January 2002 have been revised. These revisions along with the consequential revisions to the end-month net assets figure and the change between months in the level of net assets are detailed below.

US $ million: market values
Published Revised Variance
Gross Reserves 37,289 37,296 7
Liabilities
 -23,934 -23,934 -
of which
foreign currency forwards and swaps (net) -15,656 -15,656 -
repo transactions -449 -449 -
Net assets
 13,354 13,361 7
Change in net reserves #
 -126 -119 7
of which
valuation effects -143 -133 10
transactions against sterling 17 14 -3
of which
UK public sector customers -180 -180 -
Other 196 194
-3
# Change from the December levels.

3. As set out in the Chancellor's letter of 6 May 1997 to the Governor of the Bank of England, 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 February.

Part II: Bank of England Foreign Currency Assets and Liabilities - February 2002


The Bank of England's net holdings of foreign currency and gold fell by $1 million in February, bringing the end-February total to $67 million (£47 million1) compared with $68 million (£48 million2) at the end of January.

US $ million: market values
end January 2002
end February 2002

Liabilities

 -11,406 -11,091

of which
foreign currency forwards and swaps (net)4 -1,130 -1,042
Change in net holdings
 -1
of which
valuation effects -6
transactions against sterling 4
of which
UK public sector customers -
Other 4


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2. As set out in the Chancellor's letter of 6 May 1997 to the Governor of the Bank of England, 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 such intervention operations were undertaken by the Bank in February.

3. The Bank of England's foreign currency assets and liabilities arise from banking deposits placed with the Bank by overseas central banks and other customers, the net effect of foreign exchange swaps conducted in the course of the Bank's money market operations, UK participation in the TARGET system, the Bank's euro Bill and Note programme, and other capital items. Foreign exchange swaps may be 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 are 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.

1 When converted at the closing market rate (4pm) of £1 = $1.4142 on 28 February 2002.
2 When converted at the closing market rate (4pm) of £1 = $1.4135 on 31 January 2002.
3 In this presentation gross reserves exclude market valuation of foreign currency forwards and swaps. These derivatives are shown (excl sterling leg) within liabilities.
4 Net present value of foreign currency forwards, interest rate and cross currency swaps (excl sterling leg).
5 Market value of liabilities to repay foreign currency received in repo transactions.
6 Figures may not sum due to roundings.

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Notes to Editors

Background

1. The UK's international reserves are now being published in accordance with the methodology developed by the International Monetary Fund in the context of revisions to their Special Data Dissemination Standard (SDDS), and the G10 central banks in their report Enhancing transparency regarding authorities foreign currency liquidity position.

2. The UK began to disclose additional information on its foreign currency assets and liabilities required under the International Monetary Fund's Special Data Dissemination Standard (assets, liabilities and derivatives) from July 1999. Data for end-July 1999 onwards can be found on the Bank of England's website at www.bankofengland.co.uk/statistics/reserves.

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Methodology and definitions

3. The Bank of England's website also provides information on the methodology now used and definitions of the main conventions employed.

A National Statistics publication

4. National Statistics is the official source for authoritative, accurate and relevant information on the economy and society. It brings together a vast range of statistical information overseen by the National Statistician. The National Statistics logo is your assurance of statistics produced to the highest professional standards. For more information visit the National Statistics website at www.statistics.gov.uk.

Internet version

5. If you have access to the Internet, you can find this news release and other Treasury information on the HM Treasury website.

Next publication date

6. The figures for March 2002 will be published on Thursday 4 April 2002.

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Enquiries

7. Media enquiries about this press release should be addressed to Simon Moyes in the Treasury Press Office on 020 7270 4420.

8. Public enquiries (non-media) about this press release should be addressed to the Treasury's Public Enquiry Unit on

Telephone: 020 7270 4558
Fax: 020 7270 4574
Email Public Enquiries

National Statistics Public Enquiry Service

9. For general enquiries about National Statistics, contact the National Statistics Public Enquiry Service on

Telephone: 020 7533 5888
minicom 01633 812399

E-mail Office of National Statistics

Fax 01633 652747
Letters:
Room DG/18
1 Drummond Gate
LONDON
SW1V 2QQ

10. You can also find National Statistics on their website.

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Press Notice index 2002 January to June