Exchange Fund Abridged Balance Sheet and Currency Board Account

The Hong Kong Monetary Authority (HKMA) published today the Abridged Exchange Fund Balance Sheet and Currency Board Account as at 28 February 1999. The HKMA started to publish these accounts from February 1999 on a monthly basis to increase transparency.

In releasing these monthly figures on the Exchange Fund, a spokesman from the HKMA pointed out that these figures should be interpreted with care. He said that "monthly figures are likely to fluctuate due to short-term market movements and seasonal factors".

Abridged Exchange Fund Balance Sheet

At end-February 1999, total assets of the Exchange Fund amounted to HK$921.3 billion, which was HK$6.0 billion higher than at end-January 1999. Both foreign currency assets and Hong Kong dollar assets increased, by HK$1.3 billion and HK$4.7 billion respectively. The growth in foreign currency assets was mainly funded by an increase in note issuance, which was partly offset by valuation effect on foreign currency investments held by the Exchange Fund. The increase in Hong Kong dollar assets reflected mainly the appreciation in market value of the Hong Kong equities held by the Exchange Fund.

Currency Board Account

The monetary base at end-February 1999 was HK$203.0 billion, an increase of HK$6.5 billion or 3.3% from end-January 1999. Issuance of Certificates of Indebtedness contributed to much of the increase, reflecting the seasonal demand for banknotes around the Chinese New Year.

In accordance with the principle of the currency board system, the growth in the monetary base was fully backed by changes in the backing assets. In line with the growth in the monetary base, the backing assets (i.e. the foreign currency assets specifically backing the monetary base) increased by 3.3% correspondingly, from HK$213.9 billion to HK$221.0 billion. The backing ratio, therefore, remained virtually unchanged at 109% at end-February 1999.

Attachment

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

Hong Kong Monetary Authority
29 March 1999