Reflecting increases in the net foreign assets of both the Bank of Mauritius and of commercial banks, net foreign assets of the banking system went up by Rs893 million or by 4.2 per cent, from Rs21,184 million at the end of February 1999 to Rs22,077 million at the end of March 1999. Net foreign assets of Bank of Mauritius increased by Rs670 million or by 4.4 per cent to Rs16,038 million at the end of March 1999. Net foreign assets of commercial banks rose by Rs223 million or by 3.8 per cent to Rs6,039 million at the end of March 1999, after recording a drop of Rs188 million in the preceding month.

Total domestic credit increased by Rs429 million or by 0.6 per cent, from Rs73,704 million at the end of February 1999 to Rs74,133 million at the end of March 1999, higher than the growth of 0.2 per cent registered in the previous month.

Net credit to Government from the banking system at the end of March 1999, at Rs16,524 million, remained almost unchanged relative to the end February 1999 level. Net credit to Government from Bank of Mauritius declined by Rs324 million or by 8.1 per cent, from Rs3,979 million at the end of February 1999 to Rs3,655 million at the end of March 1999, higher than the drop of 1.9 per cent recorded in the preceding month. In contrast to the successive declines recorded in the preceding months, net credit to Government from commercial banks increased by Rs332 million or by 2.6 per cent, from Rs12,537 million at the end of February 1999 to Rs12,869 million at the end of March 1999.

Commercial banks' credit to the private sector went up by Rs539 million or by 1.0 per cent, from Rs56,481 million at the end of February 1999 to Rs57,020 million at the end of March 1999, higher than the rate of growth of 0.6 per cent recorded in the preceding month. The increase in credit was channelled mainly to "Traders" (Rs418 million), "Housing" (Rs100 million) and investments in tax-free debentures (Rs375 million). Declines in credit were recorded in "Sugar Industry" (Rs310 million) and "EPZ" (Rs197 million).

The combined effects of increases in both net foreign assets and domestic credit brought about a rise of Rs629 million or of 0.8 per cent in money supply M2, from Rs77,138 million at the end of February 1999 to Rs77,767 million at the end of March 1999. In the preceding month, money supply M2 had gone up by 1.7 per cent. Quasi-money went up by Rs648 million or 1.0 per cent while narrow money supply M1 fell by Rs18 million or 0.2 per cent.

Reserve money recorded a slight decline of 0.4 per cent, from Rs9,578 million at the end of February 1999 to Rs9,542 million at the end of March 1999 as against a fall of 2.0 per cent in the preceding month.

On the international foreign exchange market, the US dollar maintained its firm tone against the Euro, Japanese yen and Pound sterling as the US economy continued to outperform the flagging Euro zone and Japanese economies. According to the projections contained in the IMF's April 1999 issue of World Economic Outlook, the US economy is expected to grow by 3.3 per cent in 1999 as against an initial forecast of 1.8 per cent made in December 1998. During April 1999, the Euro hit a new low level of US$1.0565 on the New York market, pressured by persistently bleak economic outlook for the Euro zone and bearish prospects in the absence of positive developments in the Kosovo crisis. At its governing council meeting in April 1999, the European Central Bank (ECB) reduced its interest rate by 50 basis points, from 3.0 per cent to 2.5 per cent. The Bank of England also cut its base rate by 25 basis points, from 5.50 per cent to 5.25 per cent at its Monetary Policy Committee meeting in April 1999.

The Bank of Mauritius sold through intervention on the interbank foreign exchange market an amount of US$16.2 million to commercial banks in April 1999. Direct sales of foreign currencies effected by the Mauritius Sugar Syndicate (MSS) to the banking sector, mainly in Euros, amounted to an equivalent of US$26.5 million during the same month.

Reflecting broadly global trends and local market conditions, the rupee, on an average basis, depreciated between March 1999 and April 1999, against the US dollar and Japanese yen by 0.2 per cent and 0.1 per cent, respectively, but appreciated vis-à-vis the Euro and Pound sterling by 1.4 per cent and 0.5 percent, respectively. The rupee which traded at an average rate of Rs25.218 against the US dollar in March 1999 reached an average of Rs25.259 in April 1999. Against the Japanese yen, the rupee traded at an average of Rs21.160 per 100 yen in April 1999 as compared to an average of Rs21.145 per 100 yen in March 1999. In April 1999, the rupee rose against the Euro to trade at an average rate of Rs27.066 compared to an average rate of Rs27.439 in March 1999. The rupee maintained its firm tone vis-à-vis the Pound sterling, trading at an average rate of Rs40.621 in April 1999 as against Rs40.814 in March 1999.

Owing partly to intervention on the interbank foreign exchange market, the foreign exchange reserves of the Bank of Mauritius fell by Rs672 million, from Rs16,038 million at the end of March 1999 to Rs15,366 million at the end of April 1999.

Net international reserves of the country, made up of the net foreign assets of the banking system, foreign assets of the Government and the country’s Reserve Position in the International Monetary Fund (IMF) increased by Rs893 million, from Rs21,677 million at the end of February 1999 to Rs22,570 million at the end of March 1999. Based on the value of the import bill for the calendar year 1998, the end-March 1999 level of net international reserves of the country represented 23.6 weeks of imports as compared to 22.6 weeks of imports at the end of February 1999.