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$1,115.8 billion on 31 July 2006.

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 July 2006 the total assets of the Exchange Fund, at HK$1,115.8 billion, were HK$10.6 billion higher than at the end of June2006. Both foreign currency assets and Hong Kong dollar assets increased, by HK$6.4 billion and HK$4.2 billion respectively.

The increase in foreign currency assets was due mainly to valuation of foreign currency investments, interest and dividend income from foreign currency assets, which were partly offset by redemption of Certificates of Indebtedness. The increase in Hong Kong dollar assets was due mainly to an increase in bank borrowings and valuation of Hong Kong equities held by the Exchange Fund, which was partly offset by fiscal drawdowns.

The Currency Board Account shows that the Monetary Base at the end of July 2006 was HK$287.2 billion, a decrease of HK$0.4 billion, or 0.1%, from the end of June 2006. The decrease was due mainly to a decrease in Certificates of Indebtedness which was partly offset by an increase in the market value of Exchange Fund Bills and Notes outstanding.

The Backing Assets decreased by HK$5.8 billion, or 1.8%, to HK$316.8 billion. The decrease was mainly attributable to the transfer of assets out of the Backing Portfolio to the Investment Portfolio in accordance with the arrangement approved by the Exchange Fund Advisory Committee together with the redemption of Certificates of Indebtedness in the Monetary Base. These decreases were partly offset by interest from investments and revaluation gains. Reflecting this, the backing ratio declined from 112.16% at the end of June 2006 to 110.30% at the end of July 2006.

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

For further enquiries, please contact:
Sara Yip, Manager (Press), at 2878 8246 or
Ying-ying Cheng, Manager (Press), at 2878 1687

Hong Kong Monetary Authority
25 August 2006

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 August2006, the scheduled dates for issuing the press releases are as follows: