Net foreign assets of the banking system declined by Rs534 million, from Rs22,077 million at the end of March 1999 to Rs21,543 million at the end of April 1999, or by 2.4 per cent in contrast to the rise of 4.2 per cent registered in March 1999. Net foreign assets of Bank of Mauritius went down by Rs672 million or by 4.2 per cent to Rs15,366 million at the end of April 1999 whereas those of commercial banks increased for the second consecutive month, rising by Rs138 million or by 2.3 per cent to Rs6,177 million.

Total domestic credit rose by Rs368 million or by 0.5 per cent, from Rs74,945 million at the end of March 1999 to Rs75,313 million at the end of April 1999.

Net credit to Government from the banking system went up by Rs291 million, from Rs16,524 million at the end of March 1999 to Rs16,815 million at the end of April 1999, or by 1.8 per cent as compared to an increase of 0.1 per cent in March 1999. Net credit to Government from Bank of Mauritius increased by Rs578 million or by 15.8 per cent to Rs4,233 million at the end of April 1999 as against a drop of Rs324 million or of 8.1 per cent recorded in the previous month. Net credit to Government from commercial banks declined by Rs287 million or by 2.2 per cent to Rs12,582 million at the end of April 1999 as against a rise of Rs332 million or of 2.6 per cent recorded in the preceding month.

Commercial banks' credit to the private sector rose by Rs46 million or by 0.1 per cent, from Rs57,832 million at the end of March 1999 to Rs57,878 million at the end of April 1999. The increase in credit was channelled mainly to "Statutory & Para-Statal Bodies" (Rs141 million), "Housing" (Rs92 million), "Personal & Professional" (Rs88 million), "Other Industries & Manufacturers" (Rs82 million) and "Building Contractors, etc." (Rs70 million). Major declines were recorded in credit extended to "Traders" (Rs218 million) and in "Investments in tax-free debentures" (Rs141 million).

Money supply M2 went up by Rs719 million, from Rs77,767 million at the end of March 1999 to Rs78,486 million at the end of April 1999, or by 0.9 per cent, marginally higher than the rise of 0.8 per cent recorded in the preceding month. Quasi-money rose by Rs462 million or by 0.7 per cent to Rs67,700 million and narrow money supply M1 increased by Rs257 million or by 2.4 per cent to Rs10,786 million.

Reserve money increased by Rs251 million or by 2.6 per cent, from Rs9,542 million at the end of March 1999 to Rs9,793 million at the end of April 1999. It had declined by 0.4 per cent in the preceding month.

On the international foreign exchange market, the US dollar strengthened against the Euro and Japanese yen but lost ground vis-à-vis the Pound sterling during May 1999. The US dollar derived support in the wake of the unprecedented announcement by the Federal Open Market Committee that, although it had left interest rates steady at its May 1999 meeting, it had, in anticipation of inflationary pressures, shifted its balanced interest rate position held since November 1998 to a tightening bias. During May 1999, the Euro fell below its previous record low level of US$1.0565 to reach a new trough of US$1.0417. The Euro, pressured by the sluggish performance of the German economy, experienced further selling after the European Union Finance Ministers agreed to a relaxation of the Italian 1999 budget deficit target from 2.0 to 2.4 per cent of GDP. European policymakers’ apparent lack of concern over the Euro’s slide also weighed on the currency. Despite concerns expressed by the Bank of England over sterling’s strength, the Pound finished the month on a firm tone against the dollar. At its May 1999 Monetary Policy Committee meeting, the Bank of England kept UK base rate unchanged at 5.25 per cent.

The Bank of Mauritius sold through intervention on the interbank foreign exchange market an amount of US$15.9 million to commercial banks in May 1999. Direct sales of foreign currencies by the Mauritius Sugar Syndicate (MSS) to the banking sector, mainly in Euros, amounted to an equivalent of US$3.9 million during the same month.

Reflecting international trends and local market conditions, the rupee, on an average basis, depreciated between April 1999 and May 1999 against the Pound sterling and US dollar by 0.4 per cent and 0.1 per cent, respectively, but appreciated vis-à-vis the Japanese yen and Euro by 1.7 per cent and 0.6 per cent, respectively. After appreciating for four consecutive months, the rupee lost ground against the Pound sterling in May 1999 to trade at an average rate of Rs40.796 compared to an average rate of Rs40.621 in April 1999. The rupee which traded at an average rate of Rs25.259 against the US dollar in April 1999 reached an average of Rs25.286 in May 1999. Against the Japanese yen, the rupee traded at an average rate of Rs20.811 per 100 yen in May 1999 as compared to an average rate of Rs21.160 per 100 yen in April 1999. The rupee strengthened vis-à-vis the Euro for the fifth consecutive month, trading at an average rate of Rs26.899 in May 1999 as against an average rate of Rs27.066 in April 1999.

The foreign exchange reserves of the Bank of Mauritius fell by Rs284 million, from Rs15,366 million at the end of April 1999 to Rs15,082 million at the end of May 1999, reflecting essentially its intervention on the interbank foreign exchange market.

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) decreased by Rs535 million, from Rs22,570 million at the end of March 1999 to Rs22,035 million at the end of April 1999. Based on the value of the import bill for calendar year 1998, the end-April 1999 level of net international reserves of the country represented 23.0 weeks of imports as compared to 23.6 weeks of imports at the end of March 1999.