Net foreign assets of the banking system rose for the third consecutive month, increasing by Rs8,044 million or by 34.0 per cent, from Rs23,679 million at the end of October 2000 to Rs31,723 million at the end of November 2000. Net foreign assets of Bank of Mauritius rose by Rs7,409 million or by 43.6 per cent, from Rs16,986 million to Rs24,395 million, largely on account of inflows from the sale of shares by Mauritius Telecom to France Telecom. Net foreign assets of commercial banks went up by Rs635 million or by 9.5 per cent, from Rs6,693 million to Rs7,328 million.

 Domestic credit declined by Rs5,643 million or by 6.3 per cent, from Rs89,015 million at the end of October 2000 to Rs83,373 million at the end of November 2000 due mainly to the fall in net credit to Government which fully offset the rise in credit to the private sector.

 Net credit to Government fell by Rs6,271 million or by 33.1 per cent, from Rs18,926 million at the end of October 2000 to Rs12,655 million at the end of November 2000. Net credit to Government from Bank of Mauritius went down by Rs5,968 million. Net credit to Government from commercial banks fell by Rs303 million or by 2.0 per cent, from Rs14,823 million to Rs14,520 million. 

 Credit to the private sector from commercial banks rose by Rs643 million or by 0.9 per cent, from Rs69,423 million at the end of October 2000 to Rs70,066 million at the end of November 2000. Additional credit was extended to "Traders" (Rs256 million), "Housing" (Rs244 million) and "Manufacturing" sector (Rs170 million). 

 Money supply M2 rose by Rs2,410 million or by 2.6 per cent, from Rs91,303 million at the end of October 2000 to Rs93,713 million at the end of November 2000. Narrow money supply, one of the components of M2, rose by Rs217 million or by 1.9 per cent, from Rs11,151 million to Rs11,368 million. Quasi-money, the other component of M2, increased by Rs2,193 million or by 2.7 per cent, from Rs80,152 million to Rs82,345 million. 

 The level of reserve money rose by Rs548 million or by 5.4 per cent, from Rs10,069 million at the end of October 2000 to Rs10,617 million at the end of November 2000.

Based on liquidity conditions in the market, the Bank carried out five reverse repo transactions with commercial banks in December 2000 for periods varying from 1 to 2 days. The highest yield that was accepted for the reverse repo transactions was 7.80 per cent.

Between end-June 2000 and end-November 2000, the number of Automated Teller Machines (ATMs) in operation in Mauritius increased by 10 from 221 to 231 and the number of cardholders (that is to say the number of cards in circulation) went up by 31,273 from 610,849 to 642,122. The number of transactions involving the use of credit cards, debit cards, ATMs and Merchant Points of Sale increased from 1.416 million in June 2000 to 1.634 million in November 2000. The value of such transactions increased from Rs1,998 million to Rs2,600 million over that period. Outstanding advances on credit cards rose from Rs536 million to Rs587 million during the same period.

 

On the international foreign exchange market, during December 2000, the US dollar, on an average basis, depreciated against the euro and Pound sterling but appreciated vis-à-vis the Japanese yen. The month of December 2000 was marked by a deterioration in market sentiment towards the US dollar as a result of the release of a series of soft US economic data which prompted expectations that the US economy might be slowing down more rapidly than expected with resulting sharp losses in US equities. On 19 December 2000, at its last FOMC meeting for the year, the US Federal Reserve, despite leaving its federal funds rate unchanged at 6.5 per cent, confirmed the risks of a US economic slowdown.  In fact, in its accompanying statement, the Federal Reserve made a dramatic shift from its 11-month old position that inflation posed the main risk to the record US expansion and underlined that the risks are weighted mainly toward conditions that might generate economic weakness in the foreseeable future. This statement, interpreted as a clear signal that US interest rates could be cut at the next FOMC meeting on 30-31 January 2001 or even in the interim, confirmed the risks of an economic slowdown for the US economy and further depressed the US dollar.  

The euro, which opened December 2000 trading at around US$0.8762, capitalised on the weakness of the US dollar to reverse its declining trend against the US currency. At the close of the month, the euro was trading above the 90 cents dollar level, around US$0.9288. According to currency traders, views that the European region is best placed to withstand a global economic slowdown strongly favoured the single currency. The Pound sterling, taking its cue mainly from the upward movement of the Euro against the US dollar also made headway against the US currency. The Bank of England left UK interest rate unchanged at 6.5 per cent at its December Monetary Policy Committee meeting.

The US dollar, despite its overall weakness, edged higher vis-à-vis the Japanese yen; the latter undermined by losses in Tokyo stocks along with the release of soft economic data, which deepened market pessimism about the outlook for Japan’s economy. 

Direct sales of foreign currencies by the Mauritius Sugar Syndicate (MSS) to the banking sector during December 2000 amounted to an equivalent of US$16.3 million. The Bank of Mauritius intervened in the interbank foreign exchange market selling a total amount of US$10.3 million.

Reflecting international trends and local market conditions, the rupee, on average, depreciated between November 2000 and December 2000 against the euro, Pound sterling and US dollar by 5.6 per cent, 3.5 per cent, and 1.2 per cent, respectively. It, however, appreciated against the Japanese yen by 1.6 per cent. In the wake of the euro’s rebound on the international foreign exchange market during December 2000, the rupee weakened against the euro to trade at an average rate of Rs25.106 in December 2000 compared with an average rate of Rs23.689 in November 2000. The rupee lost ground against the Pound sterling to trade at an average rate of Rs40.935 in December 2000 as against an average rate of Rs39.499 in November 2000. The rupee softened against the US dollar, trading at an average rate of Rs28.034 in December 2000 compared with an average rate of Rs27.688 in November 2000. The rupee, however, moved higher vis-à-vis the Japanese yen to trade at an average rate of Rs25.100 per 100 Yen in December 2000 from an average rate of Rs25.505 per 100 Yen in November 2000.

On an average basis, between January 1999 and December 2000 the South African rand, Thailand baht, Mauritian rupee, Indonesian rupiah, Korean won, Singapore dollar, Taiwan dollar and Hong Kong dollar appreciated against the euro by 1.9 per cent, 9.6 per cent, 15.5 per cent, 17.8 per cent, 25.1 per cent, 25.1 per cent, 26.0 per cent and 28.4 per cent, respectively, while the Philippines peso depreciated vis-à-vis the euro by 0.6 per cent.

The foreign exchange reserves of the Bank of Mauritius increased by Rs445 million, from Rs24,395 million at the end of November 2000 to Rs24,840 million at the end of December 2000.

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 Rs8,057 million, from Rs24,183 million at the end of October 2000 to Rs32,240 million at the end of November 2000.  Based on the value of the import bill for fiscal year 1999-00, excluding the purchase of aircraft, the end- November 2000 level of net international reserves of the country represented 30.5 weeks of imports, up from 22.9 weeks at the end of October 2000.

The Bank of Mauritius introduced, on 15 December 2000, a large value interbank payment system called the Mauritius Automated Clearing and Settlement System (MACSS) based on Real Time Gross Settlement (RTGS) principles. The MACSS system, which is a fully automated system, electronically links all the commercial banks in Mauritius to the Bank of Mauritius via a secure, reliable and efficient payments network. It is the first phase in the automation of payment and settlement system in Mauritius. The second phase of the project which is expected to be completed in the year 2001 involves the automation of the Port Louis Clearing House, which deals with low value cheques. 

The number of transactions routed through the MACSS during the period 15 December to 29 December 2000 was 650 involving a total amount of Rs16,988 million.