2
The following illustrations of the effects of possible movements in Hong Kong's external reserves may be of interest.
It might
be mentioned that, in their calculations, Hong Kong appear to have over. Ú looked that falls in the value of sterling holdings are reflected in reduced total external reserves and therefore reduced minimum sterling
a The table assumes 78% MSP.
holdings.
1. Reserves unchanged except for securities' depreciation
£ mns
Minimum
Total
(a)
397
Sterling
313 (78.8%)
F/cv
sterling holding
£ excess+/ shortfall-
84
309.7
+ 3.3
(6)
384
300 (78.1%)
84
299.5
+ 0.5
(0)
381.8
297.8 (78.0%)
84
297.8
2. Reserves falling although some inflow (£5 mn.) of non-£ currency with sterling unchanged except for securities' depreciation
(a)
흐흐
397
(b)
389
313 (78.8%)
300 (77.1%)
84
89
309.7
303.4
+ 3.3
3.4
3. Total reserves rise but depreciation of sterling holdings greater
than income on sterling holdings
(a)
1397
313 (78.8%)
84
(d)
400
311 (77.8%)
89
(a)
405 311 (76.8%)
94
309.7
+ 3.3
309.7
+ 1.3
309.7
+ 1.3
(a) The position on 26th September 1973 at current market values (b) An estimate of the position allowing for the depreciation in the
value of sterling investments since the 26th September.
(c) The minimum sterling holding required for non-£ currency holdings
of £84 mn.
(a)
(b) + £11 mn. sterling interest and dividends and £5 mm. or £10 mn.
non-sterling currencies.