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Official Reserves (Valuation)

Volume 982: debated on Wednesday 2 April 1980

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asked the Chancellor of the Exchequer if he will make a statement about revaluation of the official reserves on 31 March.

The then Chancellor of the Exchequer informed the House on 8 February 1979 that the official reserves would be revalued annually on 31 March on a market-related basis.—[Vol. 962, c. 267.] The formula, which was used last year, was that special drawing rights and foreign currencies other than dollars would be valued in dollars at the average of the exchange rates recorded by the Bank of England over the three months preceding each 31 March and that gold would be valued in dollars at the average of the London fixing prices over the three months before each 31 March, discounted by 25 per cent.I consider, however, that prudent valuation of the reserves requires the valuation formula to take account also of actual market prices on 31 March each year. I have therefore decided that for the valuation on 31 March 1980 and for future valuations gold should be valued at 75 per cent. of the average of London fixing prices over the three months before 31 March, or 75 per cent. of the final fixing price on 31 March, whichever is the less. Similarly, special drawing rights and foreign currencies will be valued at average exchange rates over the preceding three months, or the actual rates on 31 March, whichever is less.