Net foreign assets of the banking system increased by Rs441 million or by 1.5 per cent, from Rs28,536 million at the end of April 2001 to Rs28,977 million at the end of May 2001. Net foreign assets of Bank of Mauritius fell by Rs302 million or by 1.4 per cent, from Rs21,679 million to Rs21,377 million while net foreign assets of commercial banks rose by Rs743 million or by 10.8 per cent, from Rs6,857 million to Rs7,600 million.

Domestic credit decreased by Rs991 million or by 1.1 per cent, from Rs92,597 million at the end of April 2001 to Rs91,606 million at the end of May 2001.

Net credit to Government declined by Rs42 million or by 0.2 per cent, from Rs17,344 million at the end of April 2001 to Rs17,302 million at the end of May 2001. Net credit to Government from Bank of Mauritius rose by Rs397 million or by 29.4 per cent, from Rs1,352 million to Rs1,749 million whereas net credit to Government from commercial banks dropped by Rs439 million or by 2.7 per cent, from Rs15,992 million to Rs15,553 million.

Credit to the private sector from commercial banks fell by Rs937 million or by 1.3 per cent, from Rs74,665 million at the end of April 2001 to Rs73,728 million at the end of May 2001. Credit to the "Agricultural" sector (including sugar), the "Manufacturing" sector, "Traders" and "Statutory and Parastatal Bodies" fell by Rs402 million, Rs277 million, Rs162 million and Rs126 million, respectively.

Money supply M2 went down by Rs655 million or by 0.7 per cent, from Rs96,618 million at the end of April 2001 to Rs95,963 million at the end of May 2001. Narrow money supply, one of the components of M2, fell by Rs189 million or by 1.6 per cent, from Rs12,185 million to Rs11,996 million. Quasi-money declined by Rs466 million or by 0.6 per cent, from Rs84,433 million to Rs83,967 million.

The level of reserve money fell by Rs223 million or by 2.0 per cent, from Rs10,943 million at the end of April 2001 to Rs10,720 million at the end of May 2001.

Taking into consideration liquidity conditions in the market, the Bank carried out with commercial banks in June 2001, for periods varying from 1 to 3 days, three repo transactions, of which one was at a fixed yield, and four reverse repo transactions, of which one was at a variable yield. The fixed yield repo transaction was carried out at 7.50 per cent and the lowest yield for the two variable-yield repo transactions was also 7.50 per cent. The highest yield for the variable-yield reverse repo transaction was 5.49 per cent and the three fixed-yield reverse repo transactions were carried out at 6.25 per cent.

The number of transactions routed through the Mauritius Automated Clearing and Settlement System (MACSS) in June 2001 was 2,643, involving a total amount of Rs34,352 million, compared to 2,546 transactions for a total amount of Rs31,670 million in May 2001. The average number of transactions routed daily through the MACSS increased to 126 in June 2001 from 116 in May 2001. The average daily value of transactions also went up from Rs1,440 million in May 2001 to Rs1,636 million in June 2001.

During the period December 2000 to June 2001, 12,420 transactions were routed through the MACSS for a total amount of Rs194,915 million. On an average basis, 96 transactions were routed daily through the MACSS during that period for a daily amount of Rs1,499 million.

Between end-June 2000 and end-May 2001, the number of Automated Teller Machines (ATMs) in operation in Mauritius increased by 12 from 221 to 233 and the number of cardholders (that is to say the number of cards in circulation) went up by 74,384 from 610,849 to 685,233. 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 1.704 million in May 2001. The value of such transactions increased from Rs1,998 million to Rs2,589 million over that period. Outstanding advances on credit cards rose from Rs 536 million to Rs641 million during the same period.

On the international foreign exchange market, during June 2001, the US dollar appreciated, on average, against all the major currencies. On 28 June 2001, as widely expected, the Federal Reserve, at its FOMC meeting, lowered the federal funds rate by 25 basis points, to 3.75 per cent, its lowest level in more than seven years. It was the sixth rate cut by the Federal Reserve since the beginning of the year. In its accompanying statement, the Federal Reserve said that it still sees excessive weakness, rather than inflation, as the main threat to the US economy, thereby signalling additional rate cuts should the economy deteriorate further.

The euro, which opened June 2001 on a soft note against the dollar, managed to attain an intra-month high of US$0.8630, deriving support partly from market caution over possible ECB intervention. However at the close of June 2001, the euro was trading at around US$0.8449, undermined by the release of weak French business confidence data and comments from ECB officials toning down the chances of an interest rate cut.

The Pound sterling, which started June 2001 at an intra-month high of US$1.4185, came under downward pressure against the US dollar to close the month at US$1.4076. The Pound, undermined by speculation that Britain’s Labour Party might speed up the currency’s entry into the euro zone at a lower than the current exchange rate, reached an intra-month low of US$1.3722, its lowest level in 15 years. However, following comments from British officials over the ‘cautious’ approach to euro membership and in the wake of the release of economic data that reinforced market perception that the Bank of England might leave rates unchanged for some time to come, the Pound managed to trim some of its losses. The Bank of England, as widely expected, left its key repo rate unchanged at 5.25 per cent at its monthly Monetary Policy Committee meeting on 6 June 2001.

The Japanese yen, which opened June 2001 at around Y118.65 to the US dollar, maintained a weak tone against the US currency to close the month at an intra-month low of Y124.70, amidst a gloomy economic outlook.

Direct sales of foreign currencies by the Mauritius Sugar Syndicate (MSS) to the banking sector during June 2001 amounted to an equivalent of US$9.2 million. The Bank of Mauritius intervened on the interbank foreign exchange market selling a total amount of US$16.5 million in June 2001.

Reflecting international trends and local market conditions, the rupee, on average, depreciated between May 2001 and June 2001 against the US dollar and Japanese yen by 1.3 per cent and 1.1 per cent respectively. It, however, appreciated against the euro and Pound sterling by 1.2 per cent and 0.4 per cent respectively. During June 2001, the rupee maintained its downward trend against the US dollar to trade at an average rate of Rs29.194 compared with an average rate of Rs28.809 in May 2001. The rupee went down against the Japanese yen to trade at an average rate of Rs23.988 in June 2001 as against an average rate of Rs23.732 in May 2001. The rupee,however, firmed up against the Pound sterling to trade at an average rate of Rs40.970 in June 2001 compared with an average rate of Rs41.130 in May 2001. Reflecting the euro’s general weakness on the international foreign exchange market, the rupee gained ground vis-à-vis the euro, trading at an average rate of Rs24.936 in June 2001 compared with an average rate of Rs25.244 in May 2001.

On an average basis, between January 1999 and June 2001, the Philippines peso, South African rand, Indonesian rupiah, Thailand baht, Mauritian rupee, Korean won, Singapore dollar, Taiwan dollar, and Hong Kong dollar all appreciated against the euro by 0.9 per cent, 1.5 per cent, 3.4 per cent, 9.7 per cent, 16.2 per cent, 23.1 per cent, 25.6 per cent, 27.6 per cent and 34.7 per cent, respectively.

The foreign exchange reserves of the Bank of Mauritius increased by Rs1,285 million, from Rs21,377 million at the end of May 2001 to Rs22,562 million at the end of June 2001.

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 Rs444 million, from Rs29,057 million at the end of April 2001 to Rs29,501 million at the end of May 2001. The end-May 2001 level of net international reserves of the country represented 28 weeks of imports, up from 27.6 weeks at the end of April 2001.