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$1,451.1 billion on 31 January 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 January 2008 the total assets of the Exchange Fund, at HK$1,451.1 billion, were HK$34.1 billion higher than at the end of December 2007. Foreign currency assets increased by HK$63.8 billion while Hong Kong dollar assets decreased by HK$29.7 billion.

The rise in foreign currency assets was due mainly to valuation gains on foreign currency investments, interest and dividend income from foreign currency assets, purchases of foreign currencies with Hong Kong dollars, and increases in Certificates of Indebtedness and 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.

The Currency Board Account shows that the Monetary Base at the end of January 2008 was HK$338.4 billion, an increase of HK$18.1 billion, or 5.7%, from the end of December 2007. The rise was due mainly to increases in market value of Exchange Fund Bills and Notes outstanding and Certificates of Indebtedness, the latter reflecting the seasonal demand for banknotes around the Lunar New Year. The tap issue of HK$6.0 billion of Exchange Fund Bills during the month reflected a shift of funds from the Aggregate Balance to the Exchange Fund paper by about the same amount.

The Backing Assets increased by HK$12.4 billion, or 3.5%, to HK$369.8 billion. The increase was attributable mainly to the issuance of Certificates of Indebtedness in the Monetary Base, revaluation gains and interest from investments. These increases were partly offset by 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. Reflecting this, the backing ratio declined from 111.60% at the end of December 2007 to 109.30% at the end of January 2008.

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
29 February 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 February 2008, the scheduled dates for issuing the press releases are as follows: