The foreign exchange market
3.13
During the first half, the Hong Kong dollar
consolidated the recovery that had begun towards the end of
1981. The trade-weighted exchange rate index for the Hong Kong dollar depreciated a little in the first half of January
to 84.1 from 85.9 at end-December, but in the following three
months, backed by firm domestic money market rates, the index
rose steadily to 89.3 in mid-April. In then eased to 87.4 on
12th May, but subsequently, despite the reductions
in local
interest rates, the Hong Kong dollar, along with the US dollar, gained ground against other major currencies, to the
extent that the index reached 90.3 on 26th June its highest
level for eleven months
month before ending the
at 89.7.
This was 4.4% higher than at the end of December 1981. Over
the same period, the import-weighted index rose by 6% and the
export-weighted index by 2%.
3.14
A
-
Against the US dollar alone, the Hong Kong dollar
declined from HK$5.69 per US dollar at the end of December
1981 to HK$5.94 in mid-February 1982, reflecting largely the
general strength of the US dollar. The rate then recovered to HK$5.77 in mid-March, aided by a narrowing of the differential
between local and US dollar interest rates. In the following
two months, the rate stabilised mostly within the range of
HK$5.81 to HK$5.85. After a brief rally to HK$5.71 on 24th
May, the Hong Kong dollar was affected by a general firmness
in the US dollar, accompanied by a widening interest rate
differential in the latter's favour: the rate depreciated to
HK$5.97 on 22nd June, before recovering to HK$5.91 at the end
of the month a level 3.7% lower than at the end of December
1981.
25
/ The