CONFIDENTIAL
The timing of
16.
alterations to the LAF bid and
offer rates would be as and when the need to change was identified. But this would not be brought about
while LAF is open (i.e. 4 p.m. to 5 p.m.) to banks. Given the wide spread intended for the bid and offer rates, alterations would in practice be infrequent.
17.
The LAF bid and offer rates would in effect become the floor and the ceiling respectively for the overnight rate for the Hong Kong dollar in the interbank market. In order that they would not inhibit the movement of interbank interest rates needed to support the exchange rate should sudden shocks to the monetary
system cause it to deviate sharply from 7.80, the Exchange Fund reserves the right at any time to take
off either the bid or the offer rate.
January 1992
Office of the Exchange Fund
it.
P.12