SOUTH CHINA MORNING POST
members of the community.
One of the two English morning newspapers.
Read by influential
Circulation: 42,000.
Hongkong banks
let off
SEMP.
12/12/05
the sterling hook
By the Financial Editor
Hongkong has done what
TIK
many people assumed a Colony 10 ye
could not do with its masters hammered out a new agreement with Britain which means that the sterling holdings of the commercial banks here, at one time running around $3,850 million or 40 per cent of our reserves in London, have been freed from the "yoke" of the sterling guarantee agreements.
The announcements,
on Saturday traditional day for international is most monetary statements unlikely to have any further adverse effect on the value of the floating pound.
came
that the
Yesterday bankers Colony- wide were, not unnaturally, jubilant about the arrangements that effectively mean the U.K. authorities have finally accepted a change in what had been a ridiculous situation.
Our total reserves had been guaranteed at U.S.$2.4213 to the pound last September in a six-month extension of the old Basel agreements.
With sterling in its sorry state (currently changing hands around 2.3050) local banks took prompt action in the summer to sell the currency forward. Well, over £100 million was sold in the six
wecks up to the D-day September 24 and virtually all of the £350 million or so they
We predicted it on September 26. Above is the headline the South China Morning Post ran on Page 1 in an on-the-spot
from the report
IMF meeting in Nairobi,
held has been similarly treated since.
Technically, in order to keep the percentage of its reserves up to the 89 per cent required by the agreement, the Hongkong Government would have had to ask the banks to buy back the pounds they had sold on the world's markets and presumably compensate them for mammoth exchange risks.
The British authorities, after tireless negotiations by the Financial Secretary, Mr Philip Haddon-Cave, have finally decided to recognise that this sort of crazy "Mexican standoff" situation meant that Hongkong had already diversified 40 per cent of its official reserves currencies, and that was that.
Our official holdings of
into other
pounds in London are therefore down to about $4,000 million worth now and the Government has agreed to continue to "participate" in the existing guarantees which run out on March 31, 1974. What happens then is anybody's guess.
As we have said, the pound is in such a ghastly state at the around moment, wallowing amid strikes, power crises and balance of payments chasms, that the fresh agreement with Hongkong is just a tiny straw in the winds.
Short-term, nobody wants to touch sterling with a bargepole. But in the longer term, if the U.K. ever does succeed in extricating itself from the appalling mess, it might be argued that the pound has collapsed about as much as it is likely to and more attractive chances of money appreciation are thin on the ground.
The weakness of that argument is that it gives the U.K. very much the benefit of the doubt and, in the absence of some encouraging news in the next three and a half months, we will soon be hearing the word diversification again.
One aspect that the drama has underlined is the canny astuteness of Hongkong's big clearing banks. One wonders what might have happened if central the Colony boasted a bank of its own, which is advocated in some quarters.
GNP per capita at end of 1972.
Country
United States
Sweden
Switzerland
Canada
Australia
Japan Austria
Israel
Nicaragua
In Notional Currency Units
In U.S. $ ol Official Rate
Country
In National Currency Units
In U.S. $ ot Official Rate
5,533
5.533
3,188
455
21,279
5,015
Dominican Republic
445
415
17.821
1.737
Malaysia
1.206
128
4,676
1,700
Turkey
5,964
426
Denmark
32,012
1,586
Iraq
137
416
Kuwait
1,477
1,390
Zambia
279
391
Germany, West
13,182
4,091
Algeria
1.753
386
France
19,577
3,827
Tunisia
181
381
Norway
24,350
3,661
Guatemala
35-1
35-1
2,814
3,588
Rhodesia
229
3-18
Belgium
160,615
3,581
Syria
1,266
331
Netherlands
11,007
3,392
Ecuador
7,955
318
Iceland
300,214
3,016
Colombia
7,091
310
New Zealand
2,445
2,973
Korea, South
120,500
302
Finland
11,413
2,784
El Salvador
753
301
8-48,167
2,755
Liberia
285
285
61,982
2,660
Jordan
100
280
United Kingdom Libya
+
1,095
2,570
Honduras
556
278
744
2,262
Paraguay
31,935
277
9,310
2,221
Morocco
1,175
252
Italy
1.263,991
2,171
Ghana
308
240
Ireland
738
1,924
Egypt
95
218
Argentina
8,846
1,769
Thailand
1,167
200
Chile
86,739
1,470
Philippines
1,238
183
Greece
12,246
1,108
Kenya
1,160
162
Venezuela
6,154
1,399
Bolivia
3,153
158
Spain
85,091
1,320
Sri Lanka
1,036
156
Singapore
3,6-19
1.994
Nigeria
45
136
Cyprus
-127
1,11
Khmer Republic
24.868
132
Hong Kong Portugal
5,152
965
Pakistan
1,446
131
24,256
890
Viet Nam, South
60,821
131
637
- 8} -
Sudan
42
120
เ
81
811
India
837
115
13,483
793
Haiti
5-1-1
109
9,620
770
Afghanistan
4,759
106
2,060
669
Zaïre
52
101
Uruguay
451,342
617
Malawi
79
102
Costa Rica
3.994
603
Nepal
908
90
Saudi Arabia
2,205
533
Ethiopia
188
79
Peru
fran
19.537
505
Burma
372.
70
37,097
190
Indonesia
29,080
70
2,984
480
Laos
39,000
65
18,636
466
South Africa Panama Yugoslavia Mexico Lebanon
Brazil Taiwan
Some of the rich nations might be getting poorer in terms of inflation and industrial output – but there are precious few signs of the poorer countries being able to pull themselves up by their boot-straps.
The table above shows how the countries in the world where statistics are available ranked last year in terms of Gross National Product which means private investment, Government purchases, exports and the money which the man in the strect has available to buy things.
―
The figures, produced by Dr France Pick in his soon-to-be- published Currency Yearbook, show that 19 of the 85 countries surveyed showed a gross per capita product of less than
US$200 which means $67 of purchasing power before the World War.