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Wednesday, June 21, 1972
EXCHANGE FUND BORROWING POWERS INCREASED
The Legislative Council today adopted a motion which increases
the borrowing powers of the Exchange Fund to $7,000 million. The previous
increase to $6,000 million was made in November last year.
The Financial Secretary, the Hon. C.P. Haddon-Cave, told the
Council that the increased borrowing powers had been needed to bring the
sterling assets of the Hong Kong banks under the umbrella of the United
Kingdom sterling guarantec arrangement.
He said that during the seven months since the limit of the
Fund's borrowing powers was fixed, the amount of bank controlled sterling
assets covered by the guarantee arrangement had increased from £325.7
million (34,737.45 million) to £402.2 million ($5,850.2 million). It
therefore followed that the Exchange Fund could only borrow the equivalent
of £10.3 million before the present limit on its borrowing powers was
reached.
Mr. Haddon-Cave said that this balance would not last more than
about three weeks at the rate of increase experienced so far this month.
He said the extent to which the additional borrowing powers
would have to be used and over what period would depend on a number of
fairly unpredictable factors, the main one being the buoyancy of Hong
Kong's current balance of payments position.
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