HKMA Releases Notes on July 14th 2020 Exchange Fund Advisory Committee Meeting

Posted on 08/28/2020

The Hong Kong Monetary Authority (HKMA) released notes on its Meeting of the Exchange Fund Advisory Committee Currency Board Sub-Committee held on July 14, 2020.

According to the report, “The Sub-Committee noted that the Hong Kong dollar (HKD) exchange rate traded close to the strong-side Convertibility Undertaking (CU), moving within a range of 7.7500 – 7.7571 against the US dollar (USD), during the review period. The strong-side CU was triggered 21 times between 21 April and 24 June, with accumulated inflows of HK$57.6 billion. This was underpinned by equity-related demand, including initial public offering activities, southbound Stock Connect, and dividend payments. With the Aggregate Balance expanding to HK$131.61 billion, HKD interbank interest rates generally softened. Overall, the HKD exchange and interbank markets continued to trade in a smooth and orderly manner.

The Sub-Committee noted that the Monetary Base increased to HK$1,748.31 billion at the end of the review period. In accordance with the Currency Board principles, all changes in the Monetary Base had been fully matched by changes in foreign reserves.”

The Monetary Base remains fully backed by U.S. dollar reserves. The Backing Portfolio’s assets grew to HK$ 1,951.29 billion on July 2,2020, mainly due to the purchase of U.S. dollars upon the triggering of strong-side CU.

Keywords: The Exchange Fund of the Hong Kong Special Administrative Region, Hong Kong Monetary Authority Investment Portfolio.

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