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$2,345.7 billion as at 31 December 2010.

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 financial statements by the Director of Audit is in progress.

At the end of December 2010 the total assets of the Exchange Fund, at HK$2,345.7 billion, were HK$45.7 billion lower than at the end of November 2010. Foreign currency assets decreased by HK$14.8 billion and Hong Kong dollar assets decreased by HK$30.9 billion.

The decline in foreign currency assets was mainly due to a decrease in unsettled purchases of securities, which was partly offset by valuation gains on foreign currency investments and an increase in Certificates of Indebtedness. The decline in Hong Kong dollar assets was mainly due to a decrease 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 2010 was HK$1,039.5 billion, an increase of HK$8.8 billion, or 0.9%, from the end of November 2010. The rise was mainly due to an increase in Certificates of Indebtedness which reflected the seasonal demand for banknotes around Christmas and New Year.

The Backing Assets increased by HK$6.7 billion, or 0.6%, to HK$1,121.1 billion. The increase was mainly attributable to the issuance of Certificates of Indebtedness and interest from investments which were partly offset by revaluation losses. The backing ratio decreased from 108.11% at the end of November 2010 to 107.85% at the end of December 2010.

Attachment

Annex 1 : Abridged Balance Sheet of the Exchange Fund

Annex 2 : Currency Board Account

Hong Kong Monetary Authority

28 January 2011

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 2011, the scheduled dates for issuing the press releases are as follows: