Net foreign assets of the banking system reached an all-time high of Rs23,932 million at the end of November 1999, up by Rs1,470 million, from Rs22,462 million at the end of October 1999, or by 6.5 per cent as against an increase of 1.1 per cent between end-September 1999 and end-October 1999. Net foreign assets of the Bank of Mauritius rose by Rs1,477 million, from Rs16,274 million at the end of October 1999 to Rs17,751 million at the end of November 1999 or by 9.1 per cent as compared to an increase of 3.7 per cent noted between end-September 1999 and end-October 1999. Net foreign assets of commercial banks dropped marginally by Rs7 million, from Rs6,188 million at the end of October 1999 to Rs6,181 million at the end of November 1999, or by 0.1 per cent.

Domestic credit increased by Rs412 million, from Rs79,834 million at the end of October 1999 to Rs80,246 million at the end of November 1999, or by 0.5 per cent. Growth of domestic credit was mainly driven by an increase in credit to the private sector, which was partially offset by a fall in net credit to Government from the banking system.

Net credit to Government fell for the second consecutive month, declining by Rs52 million, from Rs16,693 million at the end of October 1999 to Rs16,641 million at the end of November 1999, or by 0.3 per cent as compared to a fall of 4.0 per cent registered between end-September 1999 and end-October 1999. Net credit to Government from Bank of Mauritius went down by Rs930 million, from Rs2,974 million at the end of October 1999 to Rs2,044 million at the end of November 1999, or by 31.3 per cent, slightly lower than the drop of 32.2 per cent noted between end-September 1999 and end-October 1999. In contrast, net credit to Government from commercial banks increased by Rs879 million, from Rs13,718 million at the end of October 1999 to Rs14,597 million at the end of November 1999, or by 6.4 per cent, higher than the rise of 5.5 per cent recorded between end-September 1999 and end-October 1999.

Credit to the private sector from commercial banks rose by Rs478 million, from Rs62,324 million at the end of October 1999 to Rs62,802 million at the end of November 1999, or by 0.8 per cent as compared to the rise of 0.7 per cent noted between end-September 1999 and end-October 1999. The additional credit extended in November 1999 was directed mainly to "Hotels" (Rs341 million), "Manufacturing" sector (Rs324 million) and "Investments in Shares and Debentures" (Rs174 million).

Money supply M2 expanded by Rs1,713 million, from Rs82,388 million at the end of October 1999 to Rs84,101 million at the end of November 1999, or by 2.1 per cent as compared to a drop of 0.9 cent between end-September 1999 and end-October 1999. One component of M2, namely quasi money, increased by Rs1,379 million, from Rs72,463 million at the end of October 1999 to Rs73,842 million at the end of November 1999, or by 1.9 per cent as compared to a fall of 0.7 per cent registered between end-September 1999 and end-October 1999. The other component of M2, namely narrow money supply M1, increased by Rs335 million, from Rs9,924 million at the end of October 1999 to Rs10,259 million at the end of November 1999, or by 3.4 per cent as against a drop of 2.3 per cent recorded between end-September 1999 and end-October 1999.

Reserve money went up by Rs569 million, from Rs8,876 million at the end of October 1999 to Rs9,445 million at the end of November 1999, or by 6.4 per cent as against a fall of 9.7 cent noted between end-September 1999 and end-October 1999.

On the international foreign exchange market, the US dollar, on an average basis, appreciated against the Euro and Pound sterling but depreciated vis-à-vis the Japanese yen during December 1999. The dollar firmed up against the major European currencies, benefiting from its safe haven status as investors made last minute shifts amid Y2K concerns. The US currency also derived support from the decision of the Federal Reserve to leave the federal funds rate unchanged at 5.5 per cent and retain its neutral policy directive at its last policy meeting for the year 1999 on 21 December. However, the Federal Reserve also warned that it would consider a possible change in its policy stance at its next meeting in February 2000, should inflationary pressures build up in the wake of sustained US economic growth. The Euro, at the start of December 1999, for the first time ever, tumbled below the psychological level of one US dollar on the New York market to attain US$0.9997. Thereafter and up to mid-December, against the backdrop of positive euro zone economic data, the Euro managed to recover vis-à-vis the dollar to reach a high of US$1.0273. However, during the second half of December, amid thin trading, the Euro moved within tight ranges against the US currency. The Pound sterling also came under downward pressure against the dollar. The Bank of England, in line with market expectations, kept its key interest rate unchanged at its Monetary Policy Committee meeting at the start of December 1999. The Japanese yen, for the seventh consecutive month, strengthened against the dollar. With a view to curbing the yen’s rise, the Bank of Japan, despite thin trading conditions, stepped in the foreign exchange market on 24 December 1999 to buy dollars. However, the move had little impact in stemming the yen’s rise against the dollar.

Direct sales of foreign currencies by the Mauritius Sugar Syndicate (MSS) to the banking sector, mainly in Euros, amounted to an equivalent of US$42.8 million during December 1999.

Reflecting international trends and local market conditions, the rupee, on average, depreciated between November 1999 and December 1999 against the Japanese yen and US dollar by 2.4 per cent and 0.3 per cent, respectively but appreciated vis-à-vis the Euro and Pound sterling by 1.9 per cent and 0.2 per cent, respectively. The rupee, for the seventh consecutive month, lost ground against the yen, trading at an average rate of Rs25.016 per 100 Yen in December 1999 compared with an average rate of Rs24.418 per 100 Yen in November 1999. The rupee edged lower against the dollar, trading at an average rate of Rs25.597 in December 1999 as against an average rate of Rs25.521 in November 1999. Reflecting mainly the broad-based weakness of the single European currency on the international foreign exchange market, the rupee firmed up against the Euro to trade at an average rate of Rs25.918 in December 1999 as against Rs26.398 in November 1999. The rupee edged up against the Pound sterling, trading at an average rate of Rs41.265 to the Pound in December 1999 as against an average rate of Rs41.356 in November 1999.

The daily average exchange rate data for January 1999 and December 1999 show that our competitors' currencies appreciated sharply against the Euro. The Hong Kong dollar, Singapore dollar, Korean won, Indonesian rupiah and Taiwan dollar appreciated against the Euro by 14.0 per cent, 14.8 per cent, 18.1 per cent, 38.1 per cent and 16.7 per cent, respectively, whereas the Mauritian rupee showed an appreciation of 11.8 per cent against the Euro.

The foreign exchange reserves of the Bank of Mauritius increased by Rs674 million, from Rs17,751 million at the end of November 1999 to a new record high of Rs18,425 million at the end of December 1999.

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), increased by Rs1,466 million, from Rs22,970 million at the end of October 1999 to an all-time high of Rs24,436 million at the end of November 1999. Based on the value of the import bill for fiscal year 1998-99, excluding the purchase of aircraft, the end-November 1999 level of net international reserves of the country represented 24.6 weeks of imports, up from 23.2 weeks at the end of October 1999.

All Mauritian banks crossed the millenium date change without any Y2K hitch.