Foreign currency reserves at US$256.8 billion

The Hong Kong Monetary Authority announced that the official foreign currency reserve assets of Hong Kong amounted to US$256.8 billion at the end of June 2010, compared with US$256.2 billion at end-May 2010. There were no unsettled forward contracts at the end of June or at the end of May.

Hong Kong is the world’s eighth largest holder of foreign currency reserves based on the latest published figures, after mainland China, Japan, Russia, Taiwan, India, Korea and Switzerland.

The total foreign currency reserve assets of US$256.8 billion represent more than nine times the currency in circulation, or about 56% of Hong Kong dollar M3.

US$1.2 billion deficit recorded after 2 months

The Hong Kong Special Administrative Region Government (HKSARG) recorded expenditures of US$5.61 billion and revenues of US$4.41 billion for the period April to May 2010, resulting in a deficit of US$1.2 billion.

A HKSARG spokesman said that the deficit for the period was mainly because some major types of revenue, including salaries and profits taxes, were mostly received toward the end of the financial year.

The territory’s fiscal reserves stood at US$65.48 billion as at May 31, 2010.

Exchange Fund totals US$281.12 billion

Total assets of the Hong Kong Exchange Fund amounted to US$281.12 billion on May 31. This is US$782.05 million lower than at the end of April 2010, according to the Hong Kong Monetary Authority.

Foreign currency assets increased by US$576.92 million, while Hong Kong dollar assets decreased by US$1.35 billion.

The rise in foreign currency assets is mainly due to an increase in unsettled purchases of securities, which was partly offset by valuation losses on foreign currency investments.  The decline in Hong Kong dollar assets is mainly due to valuation losses on Hong Kong equities.

The Currency Board Account shows that the monetary base at the end of May 2010 was US$130.88 billion, a decrease of US$294.87 million, or 0.2%, from the end of April 2010.  The decline is mainly due to a decrease in certificates of indebtedness.

Backing assets increased by US$397.43 million, or 0.3%, to US$141.25 billion.  The increase was mainly attributable to revaluation gains and interest from investments, which were partly offset by the decline in the monetary base. The backing ratio increased from 107.38% at the end of April 2010 to 107.92% at the end of May 2010.