UK official holdings of international reserves:

Part I: UK Government foreign currency assets and liabilities - October 2004

1. The UK Government’s net reserves rose by $445 million in October 2004, bringing the end-October total to $18,464 million (£10,076 million¹) compared with $18,019 million (£9,959 million²) at end-September 2004.

	US $ million: market values
	End September 2004		End October 2004
Gross Reserves³	45,293		46,348
Liabilities	-27,274		-27.884
of which
foreign currency forwards and swaps (net)⁴	-16,507		-16,872
repo transactions⁵	-4,710		-5,344
Net reserves⁶	18,019		18,464
Change in net reserves		445
of which
valuation effects		424
transactions against sterling		21
of which
UK public sector customers		-340
Other		361

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 October.

Part II: Bank of England Foreign Currency Assets and Liabilities - October 2004

1. The Bank of England’s net holdings of foreign currency and gold rose by $4 million in October 2004, bringing the end-October total to $121 million (£66 million¹) compared with $117 million (£65 million²) at end-September 2004.

	US $ million: market values
	End September 2004		End October 2004
Assets³	24,768*		23,404
Liabilities	-24,651*		-23,283
of which
foreign currency forwards and swaps (net)⁴	-3,775		-2,540
repo transactions⁵	0		0
Net assets⁶	117		121
Change in net holdings		4
of which
valuation effects		12
transactions against sterling		-9
of which
UK public sector customers		-
Other		-9

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. The Bank undertook no such intervention operations in October.

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 programmes, 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 = $1.8324 on 29 October 2004.

2 When converted at the closing market rate (4pm) of £1 = $1.8094 on 30 September 2004.

3. In this presentation gross reserves in part 1 and assets in part 2 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.

* In last months press release the September Bank of England Gross Reserve assets and liabilities figures were both understated by $174mn. This revision does not have an effect the net assets held by the Bank of England in September.

Notes to editors

Background

1. The UK’s international reserves are 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.

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 about National Statistics visit www.statistics.gov.uk. The release of data in this press notice has followed the National Statistics Code of Practice and Protocol of Release Practices.

Internet version

5. If you have access to the internet, you can find this news release and other Treasury information at www.hm-treasury.gov.uk.

Next publication date

6. The figures for November 2004 are due for publication on Friday 3 December 2004.

Enquiries

7. Media enquiries about this press release should be addressed to Charles Keseru in the Treasury Press Office on 020 7270 5188.

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

Telephone: 020 7270 4558
Fax: 020 7270 4574
Email: public.enquiries@hm-treasury.gov.uk

National Statistics Public Enquiry Service

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10. You can also find National Statistics on the internet on www.statistics.gov.uk.