THE STERLING CONTENT OF THE GOVERNMENT'S EXTERNAL ASSETS WAS RAPIDLY REDUCED TO 50 PCT LATE LAST YEAR
FROM THE 70 PCT PERMITTED UNDER THE OLD STERLING GUARANTEE ARRANGEMENT, THE SOURCES SAID.
THE GOVERNMENT IS CONTINUING TO SHIFT ITS GILT HOLDINGS INTO SHORTER DATED STOCK FROM POSITIONS BUILT UP OVER SEVERAL YEARS AT THE LONG END OF THE MARKET, THEY SAID.
HOWEVER, IT WISHES TO AVOID TURNING BOOK LOSSES INTO REAL LOSSES AND WILL WAIT FOR SUITABLE SWITCHING OPPORTUNITIES.
A FURTHER SUSTAINED FALL IN THE STERLING SHARE OF EXTERNAL ASSETS IS LIKELY TO BE A SLOW PROCESS BUT THE GOVERNMENT IS THOUGHT TO BE REINVESTING ITS INTEREST EARNINGS OUTSIDE STERLING, THE SOURCES SAID.
THE NEXT LARGEST SHARE IN THE GOVERNMENT'S FOREIGN RESERVES IS TAKEN UP BY US DOLLAR ASSETS THEY SAID.
THE REMAINDER IS BELIEVED TO BE WIDELY SPREAD AMONG OTHER CURRENCIES INCLUDING MARKS, SWISS FRANCS, YEN AND CANADIAN DOLLARS.
REUTER
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