Mr Stone
Mr Cox
All
you
ever wanted to know about
HKE exchange
exchange rates, even
though it's part of an AECS newsletter
On the hole Sterling Exchange Rates
the average
yearly figures below are
T
lower than the year end figures
Economic Adviser provided. On 1016
The whole problem of exchange rates is quite
confusing, especially in relation to the fixed rates of the past, so it may help to have a simple guide!
Going back a few years we find that the exchange value of the HK$ was set in 1935 at is 3d (about op for those who are post-decimalisation!) or HK$16 = £1.
When the International Monetary Fund was set up after WWII the HK$ was given its own gold parity at a rate reflecting this and the rate to sterling was in practice maintained by use of the Exchange Fund, even though strictly speaking it was not a fixed rate.
Prior to 1947 certain HK Government officers had their salaries and pensions paid in sterling but as a result of adoption of the recommendations of the 1947 HK Salaries Commission new terms and conditions of service were introduced. Among these was the removal of the distinction between sterling and HK$ paid officers. (with all salaries, etc., henceforth being expressed in HK$) although serving officers on a sterling salary were allowed the option of remaining on the old terms or of transferring to the new ones at a HK$ salary.
In response to staff concerns over payment of salaries and pensions in sterling discussions were held with the then Secretary of State in February 1948 which eventually resulted in new arrangements being agreed and introduced in July 1952. These provided for a fixed £1 for those officers on a exchange rate of HK$16 sterling salary prior to 1947 but who had accepted conversion to a HK$ salary.
-
What the problem was at that time I don't know. The HK$ was managed in terms of its rate to sterling and it may have been more a fear of future movements than the result of actual problems.
It seems that it was not until November 1967 that anything cramatic in fact happened, when sterling was devalued and the HK$ revalued to compensate. The losses incurred as a result of this made it clear that th: old relationship to sterling was no longer appropriate. In December 1971 the US$ was devalued (until then the rate had been HK$5.58 US$1) although the HK$14.55 £1 rate was maintained.
=
=
In June 1972 sterling was floated. The 14.55 rate was retained initially to see what happened but in July the HK$ US$ link was restored (and fixed at HK$5.65 = US$1) and the relationship to sterling allowed to vary. The rate quoted in Government statistical tables is not the same as the "official" rate as it is based on the 7.T. rate, which was 14.58 until end-May 1972 when it started falling to reach
Graham Smith
HK$12.80 = £1 at end-February 1973. Since then the HK$ has had its ups and downs, as seen in the table,
HK$
£ sterling Exchange Rates 1971-1990
Year
Average
Range
1971
14.58
14.58
1972
14.11
13.30
14.58
1973
12.74
11.50
13.45
1974
11.93
11.40
12.35
1975
11.13
10.25
11.77
1976
9.00
7.90
10.23
1977
8.29
8.09 8.94
1978
9.12
8.52
10.00
1979
10.73
9.54
11.90
1980
11.70
11.00
12.42
1981
11.37
10.83 12.55
1982
10.68
10.35
11.70
1983
11.12
9.92
12.50
1984
10.42
9.16
11.65
1985
10.29
8.53
11.62
1986
11.50
10.99
w
12.06
1987
12.92
11.99
14.52
1988
13.93
13.19
14.70
1989
12.78
12.14
13.80
1990
13.97
12.75
15.22
These figures are based on end-of-month rates as
it wasn't until 1979 that the Government started publishing average rates for the month, based on the rate each day.
There have been a few notable dates within the last few years, particularly in relation to the Joint Declaration and the US$ peg.
Draft Agreement published Joint Declaration signed Joint Declaration ratified
US$ peg (HK$7.80)
Rate to £1
26.9.84
HK$9.66
19.12.84
HK$9.34
27.5.85
HK$9.87
17.10.83
HK$12.50
Although the peg to the US$ was established on 17 October 1983 the rate to sterling had been at its worst at HK$14.5 £1 on 24 September. It had improved to 12.5 at the date of the peg and continued to 11.7 within the next few days. The day-by-day variations are not apparent from the end-of-month (or even the average) figures normally quoted, and even within each day there can be quite a large range.
After the Joint Declartion was published in draft the end-of-month rates improved to a low of HK$8.53 £1 for February 1985 but then deteriorated and has not been below 12 since January 1987.
VOICE, 3/1991
17
Page 90Page 91