Overview

Net foreign assets of the banking system went down by Rs732 million or by 3.1 per cent, from Rs23,621 million at the end of July 2000 to Rs22,889 million at the end of August 2000. Net foreign assets of Bank of Mauritius dropped by Rs142 million or by 0.8 per cent, from Rs17,067 million to Rs16,926 million. Net foreign assets of commercial banks fell by Rs590 million or by 9.0 per cent, from Rs6,554 million to Rs5,964 million.

Domestic credit maintained an expansionary trend, rising by Rs1,055 million or by 1.2 per cent, from Rs87,809 million at the end of July 2000 to Rs88,864 million at the end of August 2000.

Net credit to Government increased by Rs426 million or by 2.3 per cent, from Rs18,669 million at the end of July 2000 to Rs19,095 million at the end of August 2000. Net credit to Government from Bank of Mauritius went up by Rs408 million or by 11.3 per cent, from Rs3,615 million to Rs4,023 million. Net credit to Government from commercial banks edged up by Rs18 million or by 0.1 per cent, from Rs15,054 million to Rs15,072 million.

Credit to the private sector from commercial banks rose by Rs642 million or by 0.9 per cent, from Rs68,435 million at the end of July 2000 to Rs69,077 million at the end of August 2000. Additional credit was extended by commercial banks to stockbrokers (Rs287 million), "Manufacturing Sector" (Rs260 million), "Traders" (Rs195 million), "Financial Institutions" (Rs177 million) and "Personal & Professional" (Rs120 million).

Money supply M2 increased by Rs539 million or by 0.6 per cent, from Rs89,643 million at the end of July 2000 to Rs90,182 million at the end of August 2000. Narrow money supply, one of the components of M2, dropped by Rs713 million or by 6.1 per cent, from Rs11,771 million to Rs11,058 million. Quasi-money, the other component of M2, rose by Rs1,252 million or by 1.6 per cent, from Rs77,872 million to Rs79,124 million.

The level of reserve money went down by Rs213 million or by 2.1 per cent, from Rs10,220 million at the end of July 2000 to Rs10,007 million at the end of August 2000.

Taking a view on the liquidity conditions on the market, the Bank carried out three repo transactions and one reverse repo transaction with commercial banks for periods varying from 3 to 4 days In September 2000. The lowest yield accepted for repo transactions was 7.00 per cent and the highest yield accepted for reverse repo transactions was 7.50 per cent.

Between end June 2000 and end August 2000, the number of Automated Teller Machines (ATMs) in operation in Mauritius went up by 7, from 221 to 228 and the number of card holders (that is to say the number of cards in circulation) increased by 12,068 from 610,849 to 622,917. The number of transactions involving the use of credit cards, debit cards, ATMs and Merchant Points of Sale went up from 1.42 million in June 2000 to 1.55 million in August 2000. The value of such transactions increased from Rs2.0 billion to Rs2.3 billion over that period. Outstanding advances on credit cards went up from Rs536 million to Rs573 million.

On the international foreign exchange market, during September 2000, the US dollar, on an average basis, appreciated against the euro and Pound sterling but depreciated vis-à-vis the Japanese yen. Market focus in September 2000 was on the euro. The single currency, which opened the month trading at a high of US$0.9012, subsequently came under strong selling pressure against the dollar, falling to US$0.8691, amid bearish comments on the single currency’s level. Even the ECB’s announcement on 14 September that it would buy 2.5 billion euros with the interest income earned on its foreign exchange reserves did little to bolster the single currency since the ECB disqualified its move as intervention. Pressured by persistent speculative sales, the euro, after testing several low levels against the dollar, dipped to its lifetime low of US$0.8469 on 21 September. The euro, however, received a boost following the surprising concerted intervention of the G7 countries on 22 September. At the close of the month, the single currency managed to hold on its gains trading at US$0.8815. Despite news that Denmark had rejected euro membership, wariness over renewed central bank intervention made currency traders reluctant to aggressively sell the single currency. The Pound sterling, pulled down by the weakness of the euro and amid market perception that UK interest rates were near their peaks, fell to an intra-month low of US$1.4050 against the dollar, its lowest level since 1986. The British currency, however, taking its cue mainly from the euro/dollar movement after the G7 concerted intervention, managed to close September 2000 at a high of US$1.4646. Merger and acquisition flows as well as market expectations that there was still a long way to go before UK adopts the euro were also Pound supportive. The Japanese yen, however, probed higher vis-à-vis the dollar, supported by optimism over Japan’s economic recovery.

Direct sales of foreign currencies by the Mauritius Sugar Syndicate (MSS) to the banking sector during September 2000 amounted to an equivalent of US$37.6 million. The Bank of Mauritius intervened in the interbank foreign exchange market selling a total amount of US$14.1 million.

Reflecting international trends and local market conditions, the rupee, on average, depreciated between August 2000 and September 2000 against the Japanese yen and US dollar by 1.7 per cent and 0.5 per cent, respectively. It, however, appreciated vis-à-vis the euro and Pound sterling by 3.3 per cent and 3.2 per cent, respectively. The rupee lost ground against the Japanese yen, to trade at an average rate of Rs24.929 per 100 Yen in September 2000 as against an average of Rs24.512 per 100 Yen in August 2000. The rupee edged down vis-à-vis the US dollar, trading at an average of Rs26.541 in September 2000 as against an average rate of Rs26.402 in August 2000. In the wake of the euro’s broad-based weakness against major currencies on the international front, the rupee probed higher vis-à-vis the single currency to trade at an average rate of Rs23.158 in September 2000 from an average rate of Rs23.933 in the previous month. The rupee firmed up against the Pound sterling to trade at an average rate of Rs38.096 in September 2000 compared with an average of Rs39.301 in August 2000.

On an average basis, between January 1999 and September 2000, the Philippines peso, Thailand baht, Mauritian rupee, Singapore dollar, Hong Kong dollar, Indonesian rupiah, Taiwan dollar and Korean won appreciated against the Euro by 11.2 per cent, 16.1 per cent, 25.2 per cent, 28.4 per cent, 31.0 per cent, 33.1 per cent, 37.3 per cent and 39.8 per cent, respectively.

The foreign exchange reserves of the Bank of Mauritius decreased by Rs31 million, from Rs16,926 million at the end of August 2000 to Rs16,895 million at the end of September2000.

Net international reserves of the country, made up of the net foreign assets of the banking system, the foreign assets of the Government and the country’s Reserve Position in the International Monetary Fund (IMF), decreased by Rs731 million, from Rs24,119 million at the end of July 2000 to Rs23,388 million at the end of August 2000. Based on the value of the import bill for the calendar year 1999, excluding the purchase of aircraft, the end-August 2000 level of net international reserves of the country represented 22.3 weeks of imports, down from 23.0 weeks at the end of July 2000.