GR 250
SECRET
DESKBY 06113OZ BOTH
SECRET
PA
PG017
FM HONG KONG 06104OZ JUL 84
TO IMMEDIATE FCQ
TELEGRAM NUMBER 1854 OF 6 JULY
INFO IMMEDIATE PEKING
FUTURE OF HONG KONG
HKK
100/3
NEGINTAS 11 JUL 1984
1. A SPATE OF RUMOURS HAS TRIGGERED A SHARP FALL IN THE VALUE * OF THE HONG KONG DOLLAR. THE DOLLAR BROKE THROUGHT THE PEG
LIMITS AND WAS QUOTED AT DOLLARS 7.94 TO THE U.S. DOLLAR, THE ASSOCIATION OF BANKS HAVE JUST ANNOUNCE THAT THEIR BEST LENDING RATE WILL RISE BY 3.25 PERCENT TO 17 PERCENT WITH IMMEDIATE EFFECT AND DEPOSIT RATES BY 3 PERCENT. THE RUMOURS
BEGAN TO CIRCULATE AFTER THE STOCK EXCHANGE HAD CLOSED. THE
HANG SENG INDEX CLOSED AT 822.82 (DOWN ONLY 6.11 POINTS).
2. A WIDE VARIETY OF RUMOURS IS CIRCULATING. THE BEST PICTURE
WE CAN PUT TOGETHER OF THE REASONS FOR THE SLIDE IS THAT
PEOPLE WERE ALREADY NERVOUS BECAUSE OF EVERBRIGHT'S WITHDRAWAL
FROM PROPERTY DEALS: THE CHINESE LEAKS ABOUT THE JOINT GROUP
MADE PEOPLE AFRAID THAT THERE WOULD NOT EVEN BE 13 YEARS OF
SOUND GOVERNMENT WITHOUT INTERFERENCE FROM PEKING: REPORTS IN THE U.K. PRESS, REPLAYED HERE, THAT THE PRIME MINISTER WAS IN
''FALKLANDS MOOD'' STARTED RUMOURS THAT THE BRITISH SIDE
WOULD BREAK OFF THE TALKS. FOR NO APPARENT REASON, IT WAS
RUMOURED THAT THE GOVERNOR WOULD BE MAKING AN IMPORTANT
ANNOUNCEMENT AT A PRESS CONFERENCE BEFORE HIS DEPARTURE AND
PEOPLE SEEM TO HAVE LEAPT TO THE CONCLUSION THAT HE WOULD
ANNOUNCE THE SUSPENSION OF THE TALKS. IT WAS ALSO SUGGESTED
THAT THE HONG KONG GOVERNMENT WOULD NOT INTERVENE TO SUPPORT
THE DOLLAR IN PURSUIT OF THE SUPPOSED CHANGE IN NEGOTIATING
TACTICS. ANOTHER SUGGESTION WAS THAT THE HK GOVERNMENT WAS ABOUT
TO CHANGE THE RATE AT WHICH THE DOLLAR IS LINKED TO THE U.S.
DOLLAR.
-1- SECRET
/3. WE ARE
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