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$1,029.9 billion at 31 August 2004.

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

At the end of August 2004 the total assets of the Exchange Fund, at HK$1,029.9billion, were HK$18.0 billion higher than at the end of July 2004. Both foreign currency assets and Hong Kong dollar assets increased, by HK$10.5 billion and HK$7.5 billion respectively.

The increase in foreign currency assets was mainly due to income from foreign currency assets, valuation gains on foreign currency investments and an increase in securities purchased but settled in the following month. These increases were partly offset by sale of foreign currencies for Hong Kong dollars. The increase in Hong Kong dollar assets was mainly due to an increase in bank borrowings, the purchase of Hong Kong dollars from foreign currencies and valuation gains in the market value of Hong Kong equities held by the Exchange Fund. These increases were partly offset by fiscal drawdowns and a decrease in the balance of the banking system.

The Currency Board Account shows that the Monetary Base at the end of August 2004 was HK$277.7 billion, a decrease of HK$3.3 billion, or 1.2%, from the end of July 2004. The decrease was mainly due to a decrease in the Aggregate Balance, which was partly offset by an increase of HK$0.7 billion in the market value of Exchange Fund Bills and Notes outstanding.

The Backing Assets decreased by HK$3.3 billion, or 1.0%, to HK$311.0 billion. The decrease was mainly driven by the corresponding decrease in the Aggregate Balance in the Monetary Base, which was partly offset by income from investments and revaluation gains. At the end of August, the backing ratio stood at 111.97%, compared with 111.84% at the end of July.

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

For further enquiries, please contact:
Kevin Ip, Manager (Press), at 2878 1687 or
Thomas Chan, Senior Manager (Press), at 2878 1480

Hong Kong Monetary Authority
30 September 2004

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 September 2004, the scheduled dates for issuing the press releases are as follows: