UK OFFICIAL HOLDINGS OF INTERNATIONAL RESERVES:

Part I: UK Government Foreign Currency Assets and Liabilities – August 2003

1. The UK Government’s net reserves rose by $186 million in August 2003, bringing the end-August total to $16,374 million (£10,353 million¹) compared with $16,188 million (£10,071 million²) at end-July 2003.

	US $ million: market values
	End July 2003		End August 2003
Gross Reserves³	41,698		42,293
Liabilities	-25,511		-25,919
of which
foreign currency forwards and swaps (net)⁴	-17,184		-17,248
repo transactions⁵	-2,452		-2,785
Net reserves⁶	16,188		16,374
Change in net reserves		186
of which
valuation effects		185
transactions against sterling		1
of which
UK public sector customers		-102
Other		103

2. 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 August.

Part II: Bank of England Foreign Currency Assets and Liabilities – August 2003

The Bank of England’s net holdings of foreign currency and gold fell by $4 million in August 2003, bringing the end-August total to $71 million (£45million¹) compared with $75 million (£47 million ²) at end-July 2003.

	US $ million: market values
	End July 2003		End August 2003
Assets³	18,540		18,169
Liabilities	-18,465		-18,098
of which
foreign currency forwards and swaps (net)⁴	-791		-769
repo transactions⁵	-		-
Net assets⁶	75		71
Change in net holdings		-4
of which
valuation effects		-4
transactions against sterling		-1
of which
UK public sector customers		-
Other		-1

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 August.

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 = $1.5815 on 29 August 2003.

2 When converted at the closing market rate (4pm) of £1 = $1.6074 on 31 July 2003.

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.

4. 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

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Internet version

6. 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

7. The figures for September 2003 are due for publication on Friday 3 October 2003.

Enquiries

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

9. 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

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Press Notices index 2003 July to December