FINANCIAL SYSTEM AND ECONOMY
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setting-up of the International Monetary Fund after World War II, the Hong Kong dollar was given a gold parity reflecting this pre-war rate. The relationship between the Hong Kong dollar and sterling was, however, at no time a statutory one but was established and maintained by the operations of the Exchange Fund in conjunction with the note-issuing banks. The relationship weakened after the devaluation of the pound in November, 1967, and ended after the pound was allowed to float in June, 1972, In the following month, the government announced the pegging of the Hong Kong dollar to the United States dollar, with provision for a fluctuation of two and a half per cent either side of the central rate. But in November 1974, this link was broken as well. Since that time, the Hong Kong dollar has floated independently according to market conditions.
The effective exchange rate of the Hong Kong dollar, calculated against the currencies of Hong Kong's 15 most important trading partners, moved from 88.2 on December 31, 1980 (December 18, 1971 = 100) to 85.9 on December 31, 1981. Against the United States dollar, the Hong Kong dollar moved from 5.140 on December 31, 1980 to 5.690 on December 31, 1981.