Overview

Net foreign assets of the banking system went up by Rs988 million, or 4.2 per cent, from Rs23,721 million at the end of May 2000 to Rs24,709 million at the end of June 2000. Net foreign assets of the Bank of Mauritius rose by Rs233 million, or 1.4 per cent, from Rs17,222 million to Rs17,455 million. Net foreign assets of commercial banks increased by Rs755 million, or 11.6 per cent, from Rs6,499 million to Rs7,254 million.

Domestic credit expanded by Rs1,396 million or 1.6 per cent, from Rs85,060 million at the end of May 2000 to Rs86,456 million at the end of June 2000.

Net credit to Government dropped by Rs194 million or 1.0 per cent, from Rs18,660 million at the end of May 2000 to Rs18,466 million at the end of June 2000. Commercial bank claims on the Government fell by Rs497 million or 3.1 per cent, from Rs15,961 million to Rs15,464 million. Net credit to Government from Bank of Mauritius went up by Rs303 million or 11.2 per cent, from Rs2,699 million to Rs3,002 million.

Commercial banks' credit to the private sector went up significantly by Rs1,603 million or 2.4 per cent, from Rs65,668 million at the end of May 2000 to Rs67,271 million at the end of June 2000. Net additional credit was allocated to the following sectors during the month under review: "Statutory and Parastatal Bodies" (Rs751 million), "Sugar Industry" (Rs302 million), "Hotels" (Rs180 million) and the "Manufacturing" sector (Rs125 million).

Money supply M2 went up by Rs1,113 million or 1.3 per cent, from Rs87,822 million at the end of May 2000 to Rs88,935 million at the end of June 2000. Narrow money supply, one of the components of M2, rose by Rs512 million or 4.9 per cent, from Rs10,553 million to Rs11,065 million. Quasi-money, the other component of M2, increased by Rs600 million or 0.8 per cent, from Rs77,269 million to Rs77,869 million.

The level of reserve money fell marginally by Rs12 million or 0.1 per cent, from Rs9,778 million at the end of May 2000 to Rs9,766 million at the end of June 2000.

During the month of July 2000, the Bank carried out repo transactions with commercial banks on eleven occasions. The repo period varied between overnight and 5 days. The repo rates accepted ranged from 6.25 per cent to 10.10 per cent.

Between end June 1999 and end June 2000, the number of Automated Teller Machines (ATM) in operation in Mauritius went up by 25 from 196 to 221 and the number of card holders (that is to say the number of cards in circulation) increased by 66,699 from 544,150 to 610,849. The number of transactions involving the use of credit cards, debit cards, ATMs and Merchant Point of Sales went up from 1.24 million in June 1999 to 1.42 million in June 2000. The value of such transactions increased from Rs1.8 billion to Rs2.0 billion over that period. Outstanding advances on credit cards went up from Rs452 million to Rs536 million.

On the international foreign exchange market, the US dollar, on an average basis, appreciated against all the major currencies during July 2000. The US dollar pushed higher on strong capital inflows amid expectations that the Fed was heading towards a soft landing after a spate of economic data pointed out that US inflation was under control and growth was gradually slowing down. However, towards the end of the month, higher-than-expected US second quarter GDP data, showing growth at an annualised rate of 5.2 per cent as against a forecast of 3.8 per cent, renewed expectations that the Fed might still hike interest rates at its next FOMC meeting. The yen retreated against the dollar, undermined by big Japanese corporate failures and worries about the health of Japan’s economy, which sent the Nikkei tumbling to new lows. The release of weak Japanese economic data, which fuelled expectations that the Bank of Japan would have to wait longer before ending its ultra-easy monetary policy, also weighed on the yen. The Euro, which started July 2000 at an intra-month high of US$0.9542, lost ground vis-à-vis the dollar to close at a low of US$0.9231, despite positive fundamentals in the euro zone. The Euro was undermined by capital outflows from the euro zone into the US as well as by Mergers & Acquisitions activity by European companies taking over US firms. The Euro was also hurt by waning expectations of an interest rate hike in the euro zone after the ECB left its interest rates unchanged at its governing council meeting in July. The Pound sterling, on average, also edged down against the dollar. However, sterling, which had weakened against the US dollar early in July on expectations that UK interest rates had peaked, recouped some of its losses after UK preliminary second quarter 2000 GDP data showed that the British economy might not be slowing down as broadly expected.

Direct sales of foreign currencies by the Mauritius Sugar Syndicate (MSS) to the banking sector during July 2000 amounted to an equivalent of US$3.8 million. The Bank of Mauritius intervened in the interbank foreign exchange market selling a total amount of US$7.1 million.

Reflecting international trends and local market conditions, the rupee, on average, depreciated between June 2000 and July 2000 against both the US dollar and Pound sterling by 0.5 per cent. It appreciated vis-à-vis the Japanese yen and Euro by 1.1 per cent and 0.4 per cent, respectively. The rupee edged down against the US dollar, trading at an average rate of Rs26.320 in July 2000 as against an average rate of Rs26.194 in June 2000. The rupee also eased vis-à-vis the Pound sterling to trade at an average rate of Rs39.689 in July 2000 compared with an average rate of Rs39.507 in June 2000. The rupee gained ground vis-à-vis the Japanese yen to trade at an average rate of Rs24.466 per 100 Yen in July 2000 as against an average rate of Rs24.732 per 100 Yen in June 2000. The rupee traded against the Euro at an average rate of Rs24.761 in July 2000 as against an average rate of Rs24.866 in the preceding month.

On an average basis, between January 1999 and July 2000, the Philippines peso, Thailand baht, Indonesian rupiah, Mauritian rupee, Singapore dollar, Hong Kong dollar, Taiwan dollar and Korean won appreciated against the Euro by 6.3 per cent, 12.1 per cent, 15.7 per cent, 17.1 per cent, 18.9 per cent, 22.3 per cent, 28.3 per cent and 29.6 per cent, respectively.

The foreign exchange reserves of the Bank of Mauritius decreased by Rs388 million, from Rs17,455 million at the end of June 2000 to Rs17,067 million at the end of July 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 Rs998 million, from Rs24,216 million at the end of May 2000 to Rs25,214 million at the end of June 2000. Based on the value of the import bill for calendar year 1999, excluding the purchase of aircraft, the end-June 2000 level of net international reserves of the country represented 24.0 weeks of imports, up from 23.0 weeks at the end of May 2000.