Foreign currency reserves at US$258.8 billion

Hong Kong’s foreign currency reserve assets amounted to US$258.8 billion at end-March, according to the Hong Kong Monetary Authority, compared with US$258.2 billion the previous month.

Including unsettled forward contracts, the foreign currency reserve assets at the end of March also stood at US$258.8 billion, compared with US$258.2 billion at end-February.

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

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

US$115.38 million deficit recorded in February

The Hong Kong Special Administrative Region Government recorded a US$115.38 million deficit for the month of February, bringing the net surplus for the first 11 months of the 2009-10 fiscal year down to US$6.02 billion. With one month remaining in the fiscal year, HKSARG expenditures have amounted to US$32.03 billion; revenues have totaled US$38.06 billion.

A government spokesman said the February figures do not reflect such major expenditure items as funding support for the West Island Line and payment for Sichuan Reconstruction.

Fiscal reserves stood at US$69.41 billion at end-February.

Exchange Fund totals US$282.26 billion 

Assets of the Hong Kong Exchange Fund totaled US$282.26 billion on February 28, US$500 million less than a month earlier, according to the Hong Kong Monetary Authority.

Foreign currency assets decreased US$153.84 million and Hong Kong dollar assets decreased US$346.15 million.

The decline in foreign currency assets is mainly due to a decrease in unsettled purchases of securities, which was partially offset by an increase in Certificates of Indebtedness. The decline in Hong Kong dollar assets is mainly due to fiscal drawdowns, which were partially offset by valuation gains on Hong Kong equities.

The Currency Board Account shows the monetary base at end-February was US$131.83 billion, a 0.6% increase of US$769.23 million from end-January. The increase in the monetary base is mainly due to an increase in Certificates of Indebtedness, reflecting the seasonal demand for banknotes around the Lunar New Year.

Backing assets increased US$717.94 million (0.5%) to US$141.33 billion. The increase is attributable mainly to the increase in the monetary base, together with investment interest. Revaluation losses partially offset these changes. The backing ratio decreased from 107.29% at end-January to 107.21% at end-February.

Lloyds banking license upgraded

Lloyds TSB’s restricted banking license was upgraded March 31 to a banking license, according to the Hong Kong Monetary Authority.

Lloyds is incorporated in the United Kingdom and has operated a branch in Hong Kong under a restricted banking license since 1997. According to the July 2009 issue of The Banker, it is the fifth-largest bank in the United Kingdom and ranks 38th in the world in terms of total assets.