Traditional Chinese Simplified Chinese Email this article news.gov.hk
Record of Discussion of the Meeting of the Exchange Fund Advisory Committee Currency Board Sub-Committee held on July 11, 2013
************************************************************

The following is issued on behalf of the Hong Kong Monetary Authority:

(Approved for Issue by the Exchange Fund Advisory Committee on August 6, 2013)

Report on Currency Board Operations (April 13, 2013 - June 21, 2013)
-----------------------------------------------------

     The Sub-Committee noted that the Hong Kong dollar exchange rate moved within a narrow range in April and May, and then strengthened slightly towards mid-June.  While concerns about tapering of the US Federal Reserve's asset purchase programmes and a slowing Mainland economy had heightened volatilities and led to significant sell-offs in the global and domestic equity markets, the Hong Kong dollar exchange rate was little affected and continued to trade in an orderly manner.  The Hong Kong dollar interbank interest rates were also stable during most part of the review period, only moving up slightly towards mid-June.  Additional issuance of Exchange Fund Bills and Notes in response to banks' demand had led to increase in the outstanding Exchange Fund papers and a corresponding decrease in the Aggregate Balance.  The Monetary Base decreased to HK$1,230.39 billion from HK$1,233.86 billion during the review period, mainly due to the redemption of Certificates of Indebtedness.

     The Sub-Committee noted that, in accordance with Currency Board principles, changes in the Monetary Base had been fully matched by corresponding changes in foreign reserves.

     The Report on Currency Board Operations for the period under review is at Annex.

Monitoring of Risks and Vulnerabilities
---------------------------------------

     The Sub-Committee noted that sell-offs in global stock markets had accelerated after the US Federal Reserve Chairman outlined a roadmap for tapering and eventually stopping the open-ended bond purchase programme.

     The Sub-Committee noted that although the private sector in the US appeared less resilient than previously thought, it had still contributed decent growth despite the drag from lower net exports and fiscal cuts.  

     The Sub-Committee noted that although the European Central Bank (ECB) President said that the ECB stood ready to deploy easing measures if the situation warranted, the early repayment of 3-year Longer-Term Refinancing Operations had actually shrunk the balance sheet of the ECB by almost 20% from the peak, which did not bode well for the moribund European economy.

     The Sub-Committee noted that in Mainland China, liquidity conditions tightened significantly in recent weeks but appeared to have started easing more recently in late June.

     The Sub-Committee noted that in Hong Kong, economic activities seemed to have weakened and volatilities in financial markets had increased downside risks of larger economic adjustments and property price corrections.

Impact of the Renminbi on Asian Currencies
------------------------------------------

     The Sub-Committee noted a paper analysing the impact of the renminbi on Asian currencies.

Ends/Monday, August 19, 2013
Issued at HKT 17:37

NNNN

Print this page