Hong Kong's exchange fund assets dropped to $2.9 trillion

It was a $7b decline.

According to the Monetary Authority, the Exchange Fund’s total assets amounted to $2.8958 trillion at the end of February, down $7 billion on January.

Foreign currency assets increased by $700 million while Hong Kong dollar assets decreased $7.7 billion.

The rise in foreign currency assets was mainly due to purchases of foreign currencies with Hong Kong dollars, which was largely offset by a decrease in unsettled purchases of securities and exchange losses on foreign currency investments.

The decline in Hong Kong dollar assets was mainly due to valuation losses on Hong Kong equities and fiscal drawdowns. These decreases were partly offset by placements received from Government funds and statutory bodies.

The Currency Board Account showed that the Monetary Base at the end of February was $1.2327 trillion, a decrease of $900 million, or 0.07%, on January. The decline was mainly due to a decrease in Certificates of Indebtedness.

Backing Assets rose $500 million, or 0.04%, to $1.3318 trillion. The increase was mainly attributable to revaluation gains and interest from investments which were partly offset by the redemption of Certificates of Indebtedness. The backing ratio increased to 108.04% at the end of February.