The government added an extra $7bn (£4.8bn) to its international holdings in April as it gears up to deal with any currency volatility in the event of Brexit.
The government now holds $145bn worth of reserves spread across foreign currencies, gold, funds lodged with the International Monetary Fund (IMF) and various other assets – 16 per cent more than it did this time last year.
The extra holdings “reaffirm the impression that the government is adding to its policy options ahead of the EU referendum,” said Simon French, chief economist at Panmure Gordon.
Holdings of foreign currencies dipped slightly over the month from $104bn to $102bn, though this was probably due to large swings in the value of the pound against the dollar during April.
Reserves in short-term sterling swap products, so-called reverse repurchase agreements, more than tripled to $12.7bn, “indicating a heightened demand for sterling liquidity”, according to French.
Analysts expect the value of the pound to fall to around $1.20 in the immediate aftermath of a vote to leave the European Union. That depreciation, coupled with the UK’s large current account deficit, which was seven per cent of GDP in the first quarter of the year, has reportedly raised concerns in both the Treasury and Threadneedle Street and put pressure on the chancellor to make sure the coffers are fully stocked before the vote.