DD 141730Z WASHINGTON
DD 141730Z CG NEW YORK
GRS 908
SECRET
HKK 100/7
བྷ
20 OCT 1983
DECK OFFICER
INF
PA
SECRET
DESKBY 141730Z WASHINGTON AND CG NEW YORK
FM FCO 141549Z OCT 83
TO IMMEDIATE WASHINGTON
TELEGRAM NUMBER 1706 OF 14 OCTOBER
AND TO CG NEW YORK
80
24596 1
FOLLOWING TELEGRAM NOW REPEATED TO YOU AT REQUEST OF DEPARTMENT
WAS RECEIVED FROM HONG KONG TELEGRAM NUMBER 1522 OF 13 OCTOBER.
INFO IMMEDIATE PEKING (PERSONAL FOR CHARGE)
FOLLOWING STRICTLY PERSONAL FOR CLIFT (HKD)
MIFT.
STABILISATION OF EXCHANGE RATE.
FOLLOWING IS TEXT OF STATEMENT WHICH THE FINANCIAL SECRETARY
WILL MAKE AT NOON HONG KONG TIME SATURDAY OCTOBER 15.
I WANT TO TELL YOU ABOUT TWO STEPS WHICH THE GOVERNMENT IS TAKING
NOW TO STABILISE THE EXCHANGE RATE OF THE HONG KONG DOLLAR.
2. FIRST LET ME GIVE YOU SOME BACKGROUND. FOR 37 YEARS FROM
1935 TO JULY 1972 THE HONG KONG DOLLAR WAS PEGGED TO STERLING.
IN THOSE DAYS THE STERLING AREA EXISTED AND FOR MOST OF THAT
PERIOD THE INTERNATIONAL MONETARY SYSTEM WAS CHARACTERISED BY
FIXED EXCHANGE RATES. FROM 1972 TO NOVEMBER 1974 THE HONG KONG
DOLLAR WAS PEGGED TO THE US DOLLAR. SINCE 1974 HONG KONG IN
COMMON WITH OTHER MAJOR MARKET ECONOMIES HAS HAD A FREELY FLOATING
EXCHANGE RATE. THIS FLOATING SYSTEM HAS SERVED US WELL. IT HAS
GIVEN US A MEASURE OF INSULATION FROM THE UPS AND DOWNS OF OTHER
ECONOMIES, AND UNDER IT HONG KONG HAS RECORDED VERY HIGH RATES
1
SECRET