Exchange Fund Abridged Balance Sheet and Currency Board Account

The Hong Kong Monetary Authority (HKMA) announced today (Friday) that the total assets of the Exchange Fund amounted to HK$1,338.6 billion on 31 October 2008.

The figure is included in the Exchange Fund Abridged Balance Sheet, which is released monthly together with the Currency Board Account.

At the end of October 2008 the total assets of the Exchange Fund, at HK$1,338.6 billion, were HK$87.7 billion lower than at the end of September 2008. Foreign currency assets decreased by HK$50.2 billion and Hong Kong dollar assets decreased by HK$37.5 billion.

The decline in foreign currency assets was due mainly to valuation losses on foreign currency investments, redemption of Certificates of Indebtedness and a decrease in repurchase agreements outstanding. These decreases were partly offset by purchases of foreign currencies with Hong Kong dollars.

The decline in Hong Kong dollar assets was due mainly to valuation losses on Hong Kong equities held by the Exchange Fund, sale of Hong Kong dollars for foreign currencies, fiscal drawdowns and a decrease in bank borrowings. These decreases were partly offset by an increase in the balance of the banking system.

The Currency Board Account shows that the Monetary Base at the end of October 2008 was HK$362.8 billion, an increase of HK$15.5 billion, or 4.5%, from the end of September 2008. The rise was due mainly to increases in the Aggregate Balance and the market value of Exchange Fund Bills and Notes outstanding, which were partly offset by a decrease in Certificates of Indebtedness.

The Backing Assets increased by HK$14.5 billion, or 3.8%, to HK$396.0 billion. The increase was attributable mainly to an increase in the Aggregate Balance and interest from investments. These increases were partly offset by the redemption of Certificates of Indebtedness in the Monetary Base and revaluation losses from investments. Reflecting this, the backing ratio declined from 109.85% at the end of September 2008 to 109.15% at the end of October 2008.

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

For further enquiries, please contact:
Thomas Chan, Communications Chief, at 2878 1480 or
Peggy Lo, Manager (Communications), at 2878 1687

Hong Kong Monetary Authority
28 November 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 November 2008, the scheduled dates for issuing the press releases are as follows: