Net foreign assets of the banking system at the end of February 1999, at Rs21,184 million, remained virtually unchanged relative to the end January 1999 level. Net foreign assets of Bank of Mauritius maintained an upward trend for the third consecutive month, rising by Rs180 million or by 1.2 per cent, from Rs15,188 million at the end of January 1999 to Rs15,368 million at the end of February 1999, largely offsetting the decline of Rs188 million in the net foreign assets of commercial banks.

Total domestic credit went up by Rs168 million or by 0.2 per cent, from Rs73,537 million at the end of January 1999 to Rs73,705 million at the end of February 1999 as against a fall of 1.3 per cent registered in the preceding month.

Net credit to Government from the banking system went down for the fourth consecutive month. It fell by Rs183 million or by 1.1 per cent, from Rs16,699 million at the end of January 1999 to Rs16,516 million at the end of February 1999 as against a drop of 7.1 per cent recorded in the previous month. Net credit to Government from Bank of Mauritius dropped by Rs78 million or by 1.9 per cent to Rs3,979 million at the end of February 1999 as compared to a fall of 16.0 per cent in the preceding month. Net credit to Government from commercial banks went down by Rs105 million or by 0.8 per cent to Rs12,537 million at the end of February 1999 as compared to a decline of 3.9 per cent in January 1999.

Commercial banks' credit to the private sector increased by Rs356 million or by 0.6 per cent to Rs56,635 million at the end of February 1999, slightly higher than the rise of 0.5 per cent recorded in the preceding month. Most of the credit expansion was directed to "Building Contractors, Commercial Premises and Real Estate Developers" (Rs137 million), "Personal & Professional" (Rs114 million), "EPZ" (Rs79 million), "Other Industries & Manufacturers" (Rs57 million) and investments in tax-free debentures (Rs129 million). Declines in credit were noted in "Traders" (Rs115 million) and "Hotels" (Rs52 million).

Money supply M2 rose by Rs1,320 million or by 1.7 per cent to Rs77,138 million at the end of February 1999, higher than the increase of 0.5 per cent recorded in January 1999. The rise in M2 during the month under review was largely driven by the increase of Rs 1,515 million or of 2.3 per cent in quasi-money, which was only partly offset by the decline of Rs195 million or of 1.8 per cent in narrow money supply M1.

Reserve money went down by Rs200 million or by 2.0 per cent to Rs9,578 million at the end of February 1999 as compared to an increase of 0.2 per cent in the preceding month. The decline in reserve money was essentially due to a drop in currency in circulation.

The Mauritius Sugar Syndicate (MSS) effected direct sales to the banking system of foreign currencies, mainly in Euros, to an equivalent of US$31.6 million in March 1999.

On the international foreign exchange market, the US dollar strengthened against the Euro, Japanese yen and Pound sterling during March 1999. Softer growth prospects in Europe and Japan weighed down on the European and Japanese currencies while the US dollar continued to derive support from the relatively more optimistic economic outlook in the US. Throughout March 1999, the Euro retained its weak bias against the US dollar on account of persistent selling pressure of the single currency. At its Monetary Policy Committee meeting in March 1999, the Bank of England kept its key interest rate steady at 5.5 per cent.

Reflecting international trends and local market conditions, the rupee, on an average basis, depreciated by 0.5 per cent against the US dollar between February 1999 and March 1999. The US dollar traded at an average rate of Rs25.218 in March 1999 as against Rs25.093 in February 1999. The rupee appreciated by 2.7 per cent against the Euro, trading at an average rate of Rs27.439 in March 1999 as compared to Rs28.171 in February 1999. The rupee also appreciated by 0.2 per cent vis-à-vis the Pound sterling to trade at an average rate of Rs40.814 in March 1999 as against Rs40.876 in February 1999. The rupee strengthened by 2.2 per cent vis-à-vis the Japanese yen to trade at an average rate of Rs21.145 per 100 yen in March 1999 as compared to Rs21.616 per 100 yen in February 1999.

The foreign exchange reserves of the Bank of Mauritius rose from Rs15,368 million at the end of February 1999 to Rs16,038 million at the end of March 1999.

Net international reserves of the country, made up of the net foreign assets of the banking system, foreign assets of the Government and the country’s Reserve Position in the International Monetary Fund (IMF) increased by Rs233 million, from Rs21,444 million at the end of January 1999 to Rs21,677 million at the end of February 1999. In previous issues of the monthly bulletin, the level of import coverage had been calculated using import data for the fiscal year 1997-98. Following the release of external trade data for the calendar year 1998 by the Central Statistical Office (CSO), the level of import coverage is now based on the value of the import bill for the calendar year 1998. The end-February 1999 level of net international reserves of the country represented 22.6 weeks of imports as compared to 22.4 weeks of imports at the end of January 1999.