CONFIDENTIAL

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Minimum

Hong Kong

dollar

asset level

3.

Foreign currency assets should be maintained

at a level of 15% or more of annual imports, providing the purchase of foreign currency to

maintain this level is consistent with the use of

the Fund to regulate the exchange value of the Hong

Kong dollar and providing account is taken of the

need to retain sufficient Hong Kong dollars to meet foreseeable demand for the redemption of debt

certificates issued to the Treasury.

Asset

4.

maturity

The Fund should be invested so as to

produce the following range of maturities:

spread and

% of Fund

final maturity

(a)

date

cash, notice and call deposits, and marketable obligations

maturing within 6 months:

45%

(b)

assets other than those

described in sub-paragraph

(a) of this paragraph

maturing within 5 years:

25%

(c)

assets other than those

described in sub-paragraphs

(a) and (b) of this

paragraph, but not having

a maturity exceeding 10 years

from the date of purchase to

the date of redemption except

for gilt-edged obligations

of which up to 25% of the

nominal value may be invested beyond 10 years:

CONFIDENTIAL

30%

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