Exchange Fund sees US$2.6 billion drop

Total assets of the Exchange Fund amounted to US$281.91 billion on April 30. This is US$2.6 billion lower than at end-March, according to the Hong Kong Monetary Authority.

Foreign currency assets fell US$2.84 billion, while Hong Kong dollar assets increased US$243.58 million.

The decline in foreign currency assets is mainly due to a decrease in unsettled purchases of securities, which was partially offset by valuation gains on foreign currency investments. The increase in Hong Kong dollar assets is mainly due to placements received from fiscal reserves.

The Currency Board Account shows the monetary base at end-April was US$131.17 billion, a 0.05% drop of US$64.1 million from end-March. The decline in the monetary base is mainly due to a decrease in Certificates of Indebtedness.

Backing assets grew US$192.3 million, or 0.13%, to US$140.85 billion. The increase is mainly attributable to revaluation gains and interest from investments. These changes were partially offset by the decline in the monetary base. The backing ratio increased from 107.18% at end-March to 107.38% at end-April.

US$25.64 million deficit recorded in April

In the first month of the 2010-11 financial year, the Hong Kong Special Administrative Region Government recorded expenditures of US$2.89 billion and revenues of US$2.87 billion, resulting in a deficit of US$25.64 million.

A government spokesman said the deficit is mainly because some major types of revenue, including salaries and profits taxes, are mostly received toward the end of the financial year.

Fiscal reserves stood at US$66.67 billion on April 30.

Foreign currency reserves at US$256.2 billion

Hong Kong’s foreign currency reserve assets amounted to US$256.2 billion at end-May, according to the Hong Kong Monetary Authority, compared to US$259.2 billion at end-April. 

There were no unsettled forward contracts at end-May or end-April.

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 of US$256.2 billion represent more than nine times the currency in circulation, or approximately 53% of Hong Kong dollar M3.