+
WEDNESDAY, FEBRUARY 26, 1975
27
THE AUTOMATIC EFFECTS OF THE FLOATING RATE HAD PROBABLY BEEN OBSCURED SO FAR BECAUSE MANUFACTURERS' INVENTORIES OF MATERIALS WERE LARGE WHEN THE DOLLAR WAS FLOATED, SO THAT THE FALL IN EXPORTS WHICH WAS ALREADY TAKING PLACE WAS ACCOMPANIED BY AN EVEN SHARPER FALL IN IMPORTS, AND AN IMPROVEMENT IN THE OVERALL BALANCE OF PAYMENTS SURPLUS.
IT WAS CLEAR, HOWEVER, MR. HADDON-CAVE SAID, THAT THIS PARTICULAR COMBINATION OF CIRCUMSTANCES WOULD HOT CONTINUE FOR EVER.
HE EXPLAINED THAT REDUCTIONS IN INTEREST RATES IN HONG KONG HAD SEEMED TO THE GOVERNMENT AND THE BANKS TO BE THE OBVIOUS MEANS OF EASING THE PRESSURE OF FLOWS ON CAPITAL ACCOUNT -- APPARENTLY ONE OF THE MAIN FACTORS IN THE STRENGTH OF THE HONG KONG DOLLAR.
IN THE THREE MONTHS SINCE. FLOATING, SIX REDUCTIONS IN INTEREST RATES HAD BEEN MADE. THE IMPACT, HOWEVER, HAD BEEN DISAPPOINTING PARTLY BECAUSE THE U.S. DOLLAR HAD CONTINUED TO WEAKEN IN OVERSEAS MARKETS AND PARTLY, PERHAPS, BECAUSE THE INTEREST RATE REDUCTIONS HAVE HAD A CONTRARY PSYCHOLÓGICAL EFFECT.
THE FINANCIAL SECRETARY NOTED THAT PERHAPS IT WAS TOO EARLY YET TO ASSESS THE RESULTS OF LAST WEEK'S REDUCTIONS, AND IN ANY CASE, THEY WILL HAVE MADE THINGS EASIER FOR EXPORTERS IN OTHER WAYS.
[
+
/23 ......