Exchange Fund total assets fall by $71.1bn in January

Sales of Hong Kong dollars for foreign currencies and fiscal drawdowns caused the decline in Hong Kong dollar assets.

Total assets of the Exchange Fund amounted to $2.4339 trillion at the end of February, $71.1 billion lower than at the end of January, the Monetary Authority announced on Thursday.

During the month, foreign currency assets were down $49.2 billion, while Hong Kong dollar assets shed $21.9 billion.

The decline in foreign currency assets was mainly due to decreases in unsettled purchases of securities and Certificates of Indebtedness, which were partly offset by purchases of foreign currencies with Hong Kong dollars and valuation gains on foreign currency investments.

The decline in Hong Kong dollar assets was mainly due to sales of Hong Kong dollars for foreign currencies and fiscal drawdowns, which were partly offset by an increase in the balance of the banking system.

The Currency Board Account shows the Monetary Base at the end of February was $1.0512 trillion, down $13 billion, or 1.22%, from the end of January. The decline was mainly due to a decrease in Certificates of Indebtedness.

The Backing Assets dropped $13.9 billion, or 1.21%, to $1.1349 trillion. The decrease was mainly attributable to the redemption of Certificates of Indebtedness and revaluation losses which were offset by interest from investment.

At the end of February, the backing ratio stood at 107.96%, compared with 107.95% at the end of January.