Hong Kong Exchange Fund Totals US$235.02 Billion

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Melissa Ng /David Hsieh at 212-752-3320
Daniel McAtee at 202-238-6360
Wing Yan Tong at 415-835-9315

July 31, 2009 - Total assets of the Hong Kong Exchange Fund amounted to HK$1,833.2 billion (US$235.02 billion) on June 30, 2009. This is HK$73.1 billion (US$9.37 billion) higher than at the end of May 2009, according to the Hong Kong Monetary Authority (HKMA).

Foreign currency assets increased by HK$52.3 billion (US$6.7 billion) and Hong Kong dollar assets increased by HK$20.8 billion (US$2.66 billion).

The rise in foreign currency assets was due mainly to an increase in securities purchased but settled in the following month and purchases of foreign currencies with Hong Kong dollars. The rise in Hong Kong dollar assets was due mainly to increases in Exchange Fund Bills and Notes issued but not yet settled and bank borrowings. These increases were partly offset by fiscal drawdowns.

The Currency Board Account shows that the Monetary Base at the end of June 2009 was HK$704.7 billion (US$90.3 billion), an increase of HK$14.4 billion (US$1.84 billion), or 2.1%, from the end of May 2009. The rise in the Monetary Base was due mainly to an inflow of funds into the Hong Kong dollar. The issuance of additional Exchange Fund paper during the month reduced the level of the Aggregate Balance which represented a change in the composition of the Monetary Base.

The Backing Assets increased by HK$14 billion (US$1.79 billion), or 1.9%, to HK$747.9 billion (US$95.88 billion). The increase was attributable mainly to the rise in the Monetary Base together with interest from investments. These increases were partly offset by revaluation losses. Reflecting this, the backing ratio declined from 106.32% at the end of May 2009 to 106.13% at the end of June 2009.