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The following issued on behalf of the Hong Kong Monetary Authority:
The Hong Kong Monetary Authority (HKMA) announced today (November 24) that additional Exchange Fund Bills will be offered in the tenders on December 1, 8, 15, 22 and 29, totalling HK$62,700 million, to meet the increased demand for the paper by banks given the abundance of liquidity in the banking system. The additional supply of short-dated Exchange Fund paper is designed to meet the strong demand from banks for liquidity management.
The issuance of additional Exchange Fund paper will be conducted by expanding the supply of 3-month, 6-month and 12-month Exchange Fund bills. The 3-month Exchange Fund Bills to be tendered on December 1, 8, 15, 22 and 29 will be increased by a total of HK$32,000 million. The 6-month Exchange Fund Bills to be offered on December 1, 15 and 29, together with the 12-month Exchange Fund Bills to be offered on December 8, will be expanded by HK$21,700 million in total. In addition, a new issue of 6-month Exchange Fund Bills, with a size of HK$9,000 million, will be offered on December 22 and the issue will be rolled over upon maturity. Details can be found in the revised issuance schedule for Exchange Fund Bills and Notes (Annex).
The increase in the supply of Exchange Fund Bills is consistent with Currency Board principles, since the additional issuance simply represents a change in the composition of the Monetary Base, with a shift from the Aggregate Balance to Exchange Fund paper. The Monetary Base remains fully backed by foreign exchange reserves. Interbank liquidity is expected to remain abundant after the issuance of additional Exchange Fund Bills, which is not expected to have a significant impact on liquidity conditions and interest rates.
The Aggregate Balance is projected to decline by about HK$15,000 million on December 2, by about HK$8,700 million on December 9, by about HK$12,000 million on December 16, by about HK$14,000 million on December 23, and by about HK$13,000 million on December 30.
The forecast change in the Aggregate Balance arising from the additional issuance of Exchange Fund paper is published on the HKMA website, the Reuters screen (HKMAOOC) and Bloomberg.
Annex 1: Tentative Schedule on Issuance of Exchange Fund Bills and Notes (EFBNs) from October to December 2009
Annex 2: Tentative Schedule on Issuance of Exchange Fund Bills and Notes (EFBNs) from January to March 2010
For further enquiries, please contact:
Wong Hing-fung, Manager (Communications), at 2878 1802 or
Natalie Wu, Officer (Communications), at 2878 8246
Ends/Tuesday, November 24, 2009
Issued at HKT 12:43
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