HK December Exchange Fund assets down $45.7bn

Decline in foreign currency assets was due to a decrease in unsettled purchases of securities, behind valuation gains on foreign currency investments.

Total assets of the Exchange Fund amounted to $2.3457 trillion at the end of December, down $45.7 billion on November, the Monetary Authority said on Friday, in its report.

Foreign currency assets fell by $14.8 billion and Hong Kong dollar assets decreased by $30.9 billion.

The decline in foreign currency assets was mainly due to a decrease in unsettled purchases of securities, which was partly offset by valuation gains on foreign currency investments and an increase in Certificates of Indebtedness. The decline in Hong Kong dollar assets was mainly due to a decrease in Exchange Fund Bills and Notes issued but not yet settled.

The Currency Board Account shows the Monetary Base at the end of December was $1.0395 trillion, up $8.8 billion, or 0.9%, on November. The rise was mainly due to an increase in Certificates of Indebtedness, which reflected the seasonal demand for banknotes around Christmas and New Year.

The Backing Assets rose $6.7 billion, or 0.6%, to $1.1211 trillion, mainly attributable to the issuance of Certificates of Indebtedness and interest from investments which were partly offset by revaluation losses.

The backing ratio dropped from 108.11% at the end of November to 107.85% at the end of the year.