Net foreign assets of the banking system went up for the second consecutive month, rising by Rs2,162 million or by 7.5 per cent, from Rs28,977 million at the end of May 2001 to Rs31,139 million at the end of June 2001. Net foreign assets of Bank of Mauritius increased by Rs1,185 million or by 5.5 per cent, from Rs21,377 million to Rs22,562 million. Net foreign assets of commercial banks rose by Rs977 million or by 12.9 per cent, from Rs7,600 million to Rs8,577 million.

Domestic credit went up by Rs257 million or by 0.3 per cent, from Rs91,606 million at the end of May 2001 to Rs91,863 million at the end of June 2001, reflecting essentially the rise in net credit to Government.

Net credit to Government went up by Rs277 million or by 1.6 per cent, from Rs17,302 million at the end of May 2001 to Rs17,579 million at the end of June 2001. Net credit to Government from Bank of Mauritius rose by Rs627 million or by 35.8 per cent, from Rs1,749 million to Rs2,376 million while net credit to Government from commercial banks dropped by Rs350 million or by 2.3 per cent, from Rs15,553 million to Rs15,203 million.

Credit to the private sector from commercial banks fell marginally by Rs9 million, from Rs73,728 million at the end of May 2001 to Rs73,719 million at the end of June 2001.

Money supply M2 increased by Rs1,163 million or by 1.2 per cent, from Rs95,963 million at the end of May 2001 to Rs97,126 million at the end of June 2001. Narrow money supply M1, one of the components of M2, rose by Rs388 million or by 3.2 per cent, from Rs11,996 million at the end of May 2001 to Rs12,384 million at the end of June 2001. Quasi-money went up by Rs775 million or 0.9 per cent, from Rs83,967 million to Rs84,742 million.

The level of reserve money increased by Rs623 million or by 5.8 per cent, from Rs10,720 million at the end of May 2001 to Rs11,343 million at the end of June 2001.

Taking into consideration liquidity conditions in the market, the Bank carried out in July 2001, for periods varying from 1 to 3 days, three fixed-yield repo transactions and four fixed-yield reverse repo transactions with commercial banks. The fixed yield repo transactions were carried out at 7.50 per cent while the four fixed-yield reverse repo transactions were carried out at 6.25 per cent.

Mauritius Automated Clearing and Settlement System (MACSS)

The number of transactions routed through the Mauritius Automated Clearing and Settlement System (MACSS) in July 2001 was 3001, involving a total amount of Rs29,388 million, compared to 2,643 transactions for a total amount of Rs34,352 million in June 2001. The average number of transactions routed daily through the MACSS increased to 136 in July 2001 from 126 in June 2001. The daily average value of transactions went down from Rs1,636 million in June 2001 to Rs1,336 million in July 2001.

Electronic Banking Transactions

Between end-June 2000 and end-June 2001, the number of Automated Teller Machines (ATMs) in operation in Mauritius increased by 13 from 221 to 234 and the number of cardholders (that is to say the number of cards in circulation) went up by 84,727 from 610,849 to 695,576. 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 1.579 million in June 2001. The value of such transactions increased from Rs1,998 million to Rs2,361 million over that period. Outstanding advances on credit cards rose from Rs 536 million to Rs636 million during the same period.

International and Domestic Foreign Exchange Markets

On the international foreign exchange market, during July 2001, the US dollar, on average, depreciated against the Pound sterling and euro but appreciated vis-à-vis the Japanese yen. The US dollar remained vulnerable throughout the month, undermined by the release of a number of weak US data that reinforced market pessimism over the US economy and concerns expressed by top officials that the currency’s strength was hampering global growth. Among the US data released, US second quarter GDP registered an annual growth rate of 0.7 per cent, the weakest pace in eight years. Moreover, at his semi-annual congressional testimony, the Federal Reserve Chairman, Alan Greenspan, made a sobering assessment of the US economy stating that the economy’s sub-par performance was not over yet and the Fed might need to cut interest rates further if weakness exceeded expectations.

The euro, which opened July 2001 trading around US$0.8493, managed to push higher against the US dollar to rise above US$0.88, capitalising on market uncertainty over a strong US dollar policy. The single currency also benefited from the release of tame German inflation figures, which fuelled expectations that the ECB might deliver a growth-boosting interest rate cut in the coming months. However, at the close of July 2001, the euro had shrugged off some of its gains to trade at US$0.8750 as the release of higher-than-expected euro zone money supply data dented hopes of a near-term hike in interest rates.

The Pound sterling, which started July 2001 trading at US$1.4160 came under downward pressure against the US dollar to reach its intra-month low of US$1.3975. Thereafter, the Pound, drawing support from the release of firmer-than-expected UK consumer credit data, regained ground against the US dollar to close the month at US$1.4280.

The yen remained weak vis-à-vis the US dollar, reflecting persistent bearishness in Japanese economic fundamentals.

Direct sales of foreign currencies by the Mauritius Sugar Syndicate (MSS) to the banking sector during July 2001 amounted to an equivalent of US$2.3 million. The Bank of Mauritius intervened on the interbank foreign exchange market selling a total amount of US$10.0 million in July 2001.

Reflecting international trends and local market conditions, the rupee, on average, depreciated between June 2001 and July 2001 against the Pound sterling, euro and US dollar by 1.8 per cent, 1.7 per cent and 1.0 per cent, respectively. It, however, appreciated against the Japanese yen by 1.0 per cent. During July 2001, the rupee maintained its downward trend against the US dollar to trade at an average rate of Rs29.482 compared with an average rate of Rs29.194 in June 2001. The rupee went down against the Pound sterling to trade at an average rate of Rs41.700 in July 2001 as against an average rate of Rs40.970 in June 2001. The rupee lost ground against the euro, trading at an average rate of Rs25.360 in July 2001 compared with an average rate of Rs24.936 in June 2001. The rupee, however, firmed up against the Japanese yen to trade at an average rate of Rs23.739 per 100 Yen in July 2001 compared with an average rate of Rs23.988 per 100 Yen in June 2001

On an average basis, between January 1999 and July 2001, the Indonesian rupiah, Thailand baht, Mauritian rupee, Korean won, Singapore dollar, Taiwan dollar, and Hong Kong dollar appreciated against the euro by 6.8 per cent, 8.0 per cent, 14.3 per cent, 21.4 per cent, 24.1 per cent, 24.8 per cent and 33.7 per cent, respectively. The South African rand and Philippines peso depreciated against the euro by 1.1 per cent and 3.1 per cent, respectively.

The foreign exchange reserves of the Bank of Mauritius decreased by Rs189 million, from Rs22,562 million at the end of June 2001 to Rs22,373 million at the end of July 2001.

Net International Reserves

The 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 Rs2,165 million, from Rs29,501 million at the end of May 2001 to Rs31,666 million at the end of June 2001. The end-June 2001 level of net international reserves of the country represented 30.1 weeks of imports, up from 28.0 weeks at the end of May 2001.