Exchange Fund assets up to $4.14t in July

Both foreign currency and Hong Kong dollar assets rose.

Assets by the Exchange Fund, which is used to back the Hong Kong dollar, rose by $43.6b to $4.14t as of end-July, according to a government statement. 

Foreign currency assets increased by $15.4b and Hong Kong dollar assets rose by $28.2b.

The government cites the strong asset pool of the Exchange Fund as a strong safeguard against market stability in light of the purchases made by the HKMA to defend the currency peg which has pushed the aggregate balance below $100b mark for the first time since 2008.

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The Monetary Base fell marginally by 0.4% MoM to $1.64t amidst a decrease in the outstanding amount of Certificates of Indebtedness.

“The resilience of banks and financial system in Hong Kong has been greatly enhanced since the Asian Financial Crisis. The Exchange Fund of Hong Kong holds over HK$4 trillion worth of assets, more than 80% of which being foreign exchange reserves, providing powerful defence for our financial stability,” Howard Lee, Deputy Chief Executive of the HKMA said in a previous statement.

The amount of Backing Assets also edged down 0.3% to $1.80t due to the redemption of Certificates of Indebtedness.

The backing ratio increased from 109.1% to 109.18%.