НКК
SECRET
100/3
1 0 JUL 1984
ль
Roy
A
г
Ar lift
наш нишо
FROM: R D CLIFT, HKD DATE: 6 July 1984
cc: PS/Mr Luce PS/PUS
Sir P Cradock Sir W Harding Mr Orr, FED
"MAR
Mr Hallett, Econ. Advisers Mr Clarke, News Dept
Private Secretary
Sea
HONG KONG DOLLAR
HKR 100!.
(1983) fall in its value.
Of
=
In October 1983, the Hong Kong dollar was linked to the US dollar at a rate of HK$7.80 US$1, following a severe
Since then, it has remained at around this levle, fluctuating within a narrow range of 2 cents either side of the pegged rate.
A
2.
Hong Kong telno 1854 reports that there was a run today on the Hong Kong dollar, which by the end of the trading day had fallen to a rate of HK$7.90 = US$1, a drop of 8 cents. The Hong Kong Association of Banks held an emergency meeting and raised interest rates by around 3% (the prime rate is now 17%, up 3/4%) in an effort to bring the Hong Kong dollar back to the pegged rate when trading in Hong Kong resumes on 9 July.
3.
There seems to have been no single reason for the fall in the dollar. Rather it reflects a general crisis of confidence triggered by such factors as adverse interpretations being placed on the Governor's visit to London, the approach of the September "deadline" for the conclusion of an agreement on the future of the territory, rumours that the British side might break off the talks, and the Chinese leak of their proposal to establish a joint group in Hong Kong before 1997. The current strength of the US dollar may also have been a contributory factor: there are rumours in Hong Kong that the pegged rate of $7.80 may be changed.
4.
Hong Kong are taking the line that rumours of dramatic developments in the talks are without foundation. We shall do the same. The Governor will also rebutt the rumours in anything he says to the press about his meeting today with the Prime Minister.
Quin
6 July 1984
SECRET
R D Clift
Hong Kong Department