Foreign currency reserves at US$160.6 billion
Hong Kong’s foreign currency reserves stood at US$160.6 billion at the end of September 2008, according to the Hong Kong Monetary Authority, compared to US$158.1 billion at end-August 2008.
Including unsettled forward contracts, the foreign currency reserve assets of Hong Kong at the end of September 2008 also stood at US$160.6 billion, compared to US$158.1 billion at end-August 2008.
Hong Kong is the world’s ninth largest holder of foreign currency reserves based on the latest published figures, after mainland China, Japan, Russia, India, Taiwan, Korea, Brazil and Singapore.
The total foreign currency reserve assets of US$160.6 billion represent about seven times the currency in circulation or 41% of Hong Kong dollar M3.
Interest rates up in latter part of September
 The global financial market turmoil has sparked an intense stress in the global money markets and led to a surge in the U.S. dollar interest rates. In tandem with the global developments, Hong Kong Interbank Offered Rates (HIBORs) also have shot up since the middle of September. In view of the pressures in the interbank markets, the Hong Kong Monetary Authority adopted five temporary measures to provide liquidity assistance to the licensed banks in Hong Kong, as well as adjusted the formula for the determination of base rate, which in effect equals a 100 basis points cut in the interest rates for borrowings through the discount window. These, together with the Fed rate cut in early October, implied a 150 basis points fall in the base rate in total. While the overnight HIBOR lowered notably alongside the adjustment of the base rate, the longer dated HIBORs remained high.
Hong Kong dollar trends upward
 The U.S. dollar rebounded by around 7% by end-September against a basket of currencies of its trading partners since the recent bottom in July. Tracking closely to the U.S. dollar, the declining trend of the Hong Kong dollar Effective Exchange Rate Index also was reversed in recent months.
Hang Seng Index decreases
 Local stock prices continued their downward trajectory, despite occasional rebounds boosted by the financial bailout plans and stock market stabilization measures announced by governments around the globe.
The Hang Seng Index fell from around 22,700 at the end of July to 18,016 at the end of September. Amidst the downbeat investor sentiments, initial public offering activities fell by 60.8% in the first nine months of 2008. The average daily turnover of the stock market, at US$8.15 billion in the third quarter of 2008, was down 35% compared to a year earlier.
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