Exchange Fund Abridged Balance Sheet and Currency Board Account

The Hong Kong Monetary Authority (HKMA) announced today (Thursday) that the total assets of the Exchange Fund amounted to HK$1,417.0 billion on 31 December 2007.

The figure is included in the Exchange Fund Abridged Balance Sheet, which is released monthly together with the Currency Board Account. The figures in the Exchange Fund Abridged Balance Sheet and the Currency Board Account are unaudited. The audit of the Exchange Fund's annual accounts by the Director of Audit is in progress.

At the end of December 2007 the total assets of the Exchange Fund, at HK$1,417.0 billion, were HK$6.3 billion higher than at the end of November 2007. Foreign currency assets increased by HK$17.3 billion while Hong Kong dollar assets decreased by HK$11.0 billion.

The rise in foreign currency assets was due mainly to interest and dividend income from foreign currency assets, purchases of foreign currencies with Hong Kong dollars, and an increase in Certificates of Indebtedness. These increases were partly offset by valuation losses on foreign currency investments and a decrease in repurchase agreements outstanding.

The decline in Hong Kong dollar assets was due mainly to the sale of Hong Kong dollars for foreign currencies and valuation losses on Hong Kong equities held by the Exchange Fund, which were partly offset by placements received from fiscal reserves and an increase in Exchange Fund Bills and Notes issued but not yet settled.

The Currency Board Account shows that the Monetary Base at the end of December 2007 was HK$320.2 billion, an increase of HK$5.3 billion, or 1.7%, from the end of November 2007. The rise was due mainly to an increase in Certificates of Indebtedness, reflecting the seasonal demand for banknotes around Christmas and New Year. This was partly offset by a decrease in the market value of Exchange Fund Bills and Notes outstanding.

The Backing Assets increased by HK$7.8 billion, or 2.2%, to HK$357.4 billion. The increase was attributable mainly to the issuance of Certificates of Indebtedness in the Monetary Base, interest from investments, and revaluation gains. Reflecting this, the backing ratio rose from 110.98% at the end of November 2007 to 111.60% at the end of December 2007.

Attachment
Annex 1 : Abridged Balance Sheet of the Exchange Fund
Annex 2 : Currency Board Account

For further enquiries, please contact:
Thomas Chan, Senior Manager (Press), at 2878 1480 or
Hing-fung Wong, Officer (Press), at 2878 1802

Hong Kong Monetary Authority
31 January 2008

At present, four press releases relating to the Exchange Fund's data are issued by the HKMA each month. Three of these releases are issued to disseminate monetary data in accordance with the International Monetary Fund's Special Data Dissemination Standard (SDDS). The fourth press release, on the Exchange Fund's Abridged Balance Sheet and Currency Board Account, is made in accordance with the HKMA's policy of maintaining a high level of transparency. For the month of January 2008, the scheduled dates for issuing the press releases are as follows: