Hong Kong Monetary Authority

The Hong Kong Monetary Authority (HKMA) announced today (27 October) that the total assets of the Exchange Fund amounted to HK$988.9 billion as at 30 September 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 September 2000, the total assets of the Exchange Fund, at HK$988.9 billion, were HK$1.1 billion lower than at the end of August. Foreign currency assets increased by HK$8.1 billion while Hong Kong dollar assets decreased by HK$9.2 billion.

The increase in foreign currency assets was mainly attributable to foreign currency investment income, revaluation gains on foreign currency investments and an increase in currency notes issued.

The decrease in Hong Kong dollar assets was due largely to a decrease in the market value of Hong Kong equities held by the Exchange Fund and a decrease in placements by other government funds which were partly offset by placements from other institutions.

Figures in the Currency Board Account show that the monetary base at the end of September was HK$209.9 billion, an increase of HK$3.1 billion, or 1.5%, from the end of August 2000. The rise was mainly due to an increase in Certificates of Indebtedness of HK$2.8 billion.

The backing assets increased by HK$3.6 billion, or 1.6% from HK$230.2 billion to HK$233.8 billion. The rise was mainly driven by the corresponding increase in Certificates of Indebtedness in the monetary base together with income from investment and revaluation gains of HK$1.2 billion. Reflecting this, the backing ratio increased marginally from 111.3% at the end of August to 111.4% at the end of September.

Attachment

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

For further enquiries, please contact:

Thomas Chan, Senior Manager (Press), at 2878 1480 or
Caitlin Wong, Manager (Press), at 2878 1687

Hong Kong Monetary Authority
27 October 2000

At present, four press releases relating to the Exchange Fund's data are issued each month. Three of these releases are issued to disseminate monetary data in accordance with the International Monetary Fund's Special Data Dissemination Standard (SDDS). The fourth press release, on the Exchange Fund's Abridged Balance Sheet and Currency Board Account, is made in accordance with the HKMA's policy of maintaining a high level of transparency. For the month of October, the scheduled dates for issuing the press releases are as follows:

9 October (Issued)	SDDS International Reserves (Hong Kong's Latest Foreign Currency Reserve Assets Figures)
16 October (Issued)	SDDS Analytical Accounts of the Central Bank (Exchange Fund Balance Sheet Data)
27 October	Exchange Fund Abridged Balance Sheet and Currency Board Account
31 October	SDDS Template on International Reserves and Foreign Currency Liquidity

Annex 1

Exchange Fund Abridged Balance Sheet
as at 30 September 2000
(Expressed in millions of Hong Kong dollars)

Notes:
1. These include US dollar assets for backing the Monetary Base, which amounted to HK$233,810 million as at end-September 2000 and HK$230,161 million as at end-August 2000.

2. These include lending collateralised by Exchange Fund paper under the Discount Window, which amounted to HK$642 million as at end-September 2000 (HK$326 million as at end-August 2000).

3. A component of the Monetary Base.

4. These include interest payable on Exchange Fund paper and accounts payable under Currency Board operations.

Exchange Fund
Currency Board Account
as at 30 September 2000
(Expressed in millions of Hong Kong dollars)

3. Discount Window Operations:

(i) Discount Window Operations involve Hong Kong dollar overnight advances made to banks by way of crediting their accounts maintained with the HKMA (which is part of the balance of the banking system) on discounting Exchange Fund Bills and Notes and other eligible paper. In accordance with generally accepted accounting practice, the Exchange Fund Bills and Notes discounted with the HKMA are not accounted for as reductions in the liabilities of the HKMA but are regarded as securities held against the advances so made.

(ii) For the purpose of this Account, the advances to banks secured on Exchange Fund Bills and Notes amounting to HK$642 million at 30 September 2000 (HK$326 million at 31 August 2000) are shown as deductions in arriving at the Monetary Base.

4. Interest Payments on Exchange Fund Bills and Notes:

(i) Starting from 1 April 1999, interest payments on Exchange Fund Bills and Notes have been allowed to increase the amount of outstanding Exchange Fund paper.

(ii) During September, the nominal value of Exchange Fund Bills and Notes increased from HK$106.34 billion to HK$106.82 billion.

5. This represents the net amount of receivables and payables for unsettled transactions in respect of investments and redemption/issuance of Certificates of Indebtedness.

6. It should be noted that the whole of the Exchange Fund assets, not just the backing assets, are available for the purpose of defending the linked exchange rate.

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