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

Hong Kong Exchange Fund Totals US$198.75 Billion

For more information, please contact:
Melissa Ng / David Hsieh at 212-752-3320
Daniel McAtee at 202-238-6360
Wing Yan Tong at 415-835-9315

February 27, 2009 - Total assets of the Hong Kong Exchange Fund amounted to HK$1,550.3 billion (US$198.75 billion) on January 31, 2009, according to the Hong Kong Monetary Authority (HKMA). This is HK$7.4 billion (US$948.71 million) lower than at the end of December 2008.

Foreign currency assets decreased by HK$13 billion (US$1.66 billion) while Hong Kong dollar assets increased by HK$5.6 billion (US$717.94 million).

The decline in foreign currency assets was due mainly to valuation losses on foreign currency investments, which was partly offset by purchases of foreign currencies with Hong Kong dollars and an increase in Certificates of Indebtedness.

The rise in Hong Kong dollar assets was due mainly to placements received from fiscal reserves, which were partly offset by a decrease in bank borrowings and valuation losses on Hong Kong equities held by the Exchange Fund.

The Currency Board Account shows that the Monetary Base at the end of January 2009 was HK$541.5 billion (US$69.42 billion), an increase of HK$34.9 billion (US$4.47 billion), or 6.9%, from the end of December 2008. The rise was due mainly to an increase in Certificates of Indebtedness reflecting the seasonal demand for banknotes around the Lunar New Year, and the increase in the Aggregate Balance from the sale of Hong Kong dollars for US dollars. The increase in the latter was offset by the issuance of additional Exchange Fund Bills.

The Backing Assets increased by HK$30.9 billion (US$3.96 billion), or 5.6%, to HK$585.4 billion (US$75.05 billion). The increase was attributable mainly to an increase in the Aggregate Balance and the issuance of Certificates of Indebtedness in the Monetary Base together with interest from investments. These increases were partly offset by revaluation losses. Reflecting this, the backing ratio declined from 109.48% at the end of December 2008 to 108.11% at the end of January 2009.