Exchange Fund Abridged Balance Sheet and Currency Board Account

The Hong Kong Monetary Authority (HKMA) announced today (25 February 2000) that the total assets of the Exchange Fund amounted to HK$990.2 billion as at 31 January 2000.

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 January 2000, the total assets of the Exchange Fund, at HK$990.2 billion, were HK$12.5 billion lower than at the end of December 1999. Both foreign currency assets and Hong Kong dollar assets decreased, by HK$2.3 billion and HK$10.2 billion respectively.

The decrease in foreign currency assets was mainly due to a reduction in currency notes outstanding and the sale of foreign currencies for Hong Kong dollars. The decrease in Hong Kong dollar assets was due largely to the decrease in the market value of Hong Kong equities held by the Exchange Fund, which was partially offset by an increase in net placements by government funds and other institutions.

Figures in the Currency Board Account show that the monetary base at the end of January was HK$223.7 billion, a decrease of HK$10.7 billion, or 4.56%, from the end of December 1999. The decrease was attributable to reductions in Certificates of Indebtedness and the Aggregate Balance, by HK$5.7 billion and HK$5.5 billion respectively. These changes reflected a reversal of the high demand for bank notes and inter-bank liquidity associated with seasonal and Year 2000 related factors.

The backing assets decreased by HK$10.0 billion, or 3.88%, from HK$257.0 billion to HK$247.0 billion. The decline was mainly driven by the corresponding decreases in Certificates of Indebtedness and the Aggregate Balance in the monetary base, which were partly offset by net income and revaluation gains of HK$1.1 billion. Reflecting this, the backing ratio increased from 109.64% at the end of December to 110.43% at the end of January.

Attachment

Annex 1 : Abridged Balance Sheet of the Exchange Fund

Annex 2 : Currency Board Account

Hong Kong Monetary Authority

25 February 2000