UK OFFICIAL HOLDINGS OF INTERNATIONAL RESERVES:

Part I: UK Government Foreign Currency Assets and Liabilities – July 2004

1. The UK Government’s net reserves fell by $80 million in July 2004, bringing the end-July total to $17,467 million (£9,604 million¹) compared with $17,546 million (£9,674 million ²) at end-June 2004.

	US $ million: market values
	End June 2004		End July 2004
Gross Reserves³	44,823		43,426
Liabilities	-27,277		-25,959
of which
foreign currency forwards and swaps (net)⁴	-17,928		-16,325
repo transactions⁵	-3,593		-4,013
Net reserves⁶	17,546		17,467
Change in net reserves		-80
of which
valuation effects		-93
transactions against sterling		13
of which
UK public sector customers		-97
Other		111

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 July.

Part II: Bank of England Foreign Currency Assets and Liabilities – July 2004

1. The Bank of England’s net holdings of foreign currency and gold fell by $2 million in July 2004, bringing the end-July total to $111 million (£61 million¹) compared with $112 million (£62 million²) at end-June 2004.

	US $ million: market values
	End June 2004		End July 2004
Assets³	21,984		22,861
Liabilities	-21,871		-22,750
of which
foreign currency forwards and swaps (net)⁴	-3,479		-3,730
repo transactions⁵	0		0
Net assets⁶	112		111
Change in net holdings		-2
of which
valuation effects		-16
transactions against sterling		14
of which
UK public sector customers		-
Other		14

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 July.

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 = $1.8137 on 30 June 2004

2. When converted at the closing market rate (4pm) of £1 = $1.8137 on 30 June 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.

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 July 2004 are due for publication on Wednesday 3 September 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.