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The Hong Kong Monetary Authority (HKMA) published today the Abridged Exchange Fund Balance Sheet and Currency Board Account as at April 30, 1999.

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

Abridged Exchange Fund Balance Sheet

At end-April 1999, total assets of the Exchange Fund amounted to HK$955.7 billion, HK$28.6 billion higher than at end-March 1999. Both foreign currency assets and Hong Kong dollar assets increased, by HK$0.9 billion and HK$27.8 billion respectively. The increase in foreign currency assets reflected mainly investment income from and the revaluation effect on foreign currency investments, which were partly offset by redemptions of Certificates of Indebtedness. The increase in Hong Kong dollar assets reflected mainly the appreciation in the market value of the Hong Kong equities held by the Exchange Fund.

Currency Board Account

The monetary base at end-April 1999 was HK$198.3 billion, a decrease of HK$1.2 billion or 0.6% from end-March 1999. The decrease in the monetary base mainly reflected a HK$2.9 billion decrease in Certificates of Indebtedness, which was partly offset by increases in outstanding Exchange Fund Bills and Notes and the balance of the banking system (Aggregate Balance), of HK$0.9 billion each.

Starting from April 1, interest payments on Exchange Fund paper have been allowed to expand the Aggregate Balance. Additional Exchange Fund paper is then issued to absorb the increase in the Aggregate Balance. This arrangement is consistent with the discipline of currency board arrangements as such interest payments are backed by interest income derived from the backing assets. Partly reflecting this arrangement, the market value of outstanding Exchange Fund Bills and Notes increased by HK$858 million during April (the nominal value rose by HK$333 million).

In April, the Aggregate Balance rose by HK$874 million, of which HK$752 million represents the purchase of US dollars by the HKMA during the month. The rest reflected the effect of interest payments on Exchange Fund paper which was not yet absorbed by additional Exchange Fund paper issuance.

Mainly reflecting the decline in Certificates of Indebtedness, the backing assets decreased by 0.6% to HK$217.1 billion at end-April. As a result, the backing ratio remained virtually unchanged at 109.5%.

Attachment

Annex 1 : Abridged Balance Sheet of the Exchange Fund (which is at HKMA Website: http://www.info.gov.hk/hkma/eng/press/index.htm)

Annex 2 : Currency Board Account(which is at HKMA Website: http://www.info.gov.hk/hkma/eng/press/index.htm)

END/Friday, May 28, 1999

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