FRIDAY, SEPTEMBER 16, 1983
SIR JOHN REVIEWS HK ECONOMY
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THE DEPRECIATION OF THE HONG KONG DOLLAR IS NOT PRINCIPALLY DUE TO ECONOMIC FACTORS AS HONG KONG'S ECONOMY, LED BY EXPORT GROWTH, IS IMPROVING RAPIDLY, THE FINANCIAL SECRETARY, SIR JOHN BREMRIDGE, SAID IN HIS MID-YEAR ECONOMIC REVIEW THIS (FRIDAY) EVENING.
HE SAID THAT AMONG OTHER FACTORS, CONCERN OVER THE POLITICAL FUTURE OF HONG KONG HAD HEAVILY INFLUENCED THE FOREIGN EXCHANGE MARKET THIS YEAR.
+ IT IS NOT POSSIBLE FOR THE GOVERNMENT TO FIX THE EXCHANGE RATE OF THE HONG KONG DOLLAR AT ANY PARTICULAR LEVEL. THIS MUST DEPEND UPON THE FORCES OF THE MARKET PLACE, SIR JOHN SAID IN HIS REVIEW PRESENTED AT THE FOREIGN CORRESPONDENTS' CLUB.
ADJUSTMENT MUST THEREFORE BE EXPECTED IN ACCORDANCE WITH MARKET FACTORS, WHICH WILL IN TIME REFLECT UNDERLYING VALUES, HE ADDED.
+ INTERVENTION BY THE EXCHANGE FUND CAN ONLY SMOOTH THE CHANGING COURSE OF CROSS RATES (WHICHEVER WAY THE TREND IS RUNNING), WHILE DECISIONS BY THE HONG KONG ASSOCIATION OF BANKS ON DEPOSIT RATES MUST REFLECT INTER ALIA THE PROBLEMS OF INDUSTRY,+ HE SAID.
CITING ANOTHER FACTOR, HE SAID THAT FROM THE REDUCTION IN LOCAL INTEREST RATES ON JULY 6 UNTIL THE 1.5 PERCENTAGE POINTS INCREASE ON SEPTEMBER 8, THE INTEREST RATE DIFFERENTIAL HAD CLEARLY BEEN IN FAVOUR OF U.S. DOLLAR DEPOSITS, WHICH SOME WOULD GALL +AN ALICE-IN-WONDERLAND SITUATION.
FURTHERMORE, THROUGHOUT THIS YEAR THE FOREIGN EXCHANGE MARKET HAD BEEN HEAVILY INFLUENCED BY THE GENERAL STRENGTH OF THE U.S. DOLLAR WORLDWIDE, GREAT CONCERN ABOUT SOME SOVEREIGN RISKS, AND SPECULATIVE ACTIVITIES, SIR JOHN NOTED,
BUT HE ADDED, WHILE HONG KONG ACCEPTS THE REALITY OF MARKET FORCES, THE DEPRECIATION OF THE HONG KONG DOLLAR OVER THE PAST YEAR DOES SEEM EXCESSIVE IN TERMS OF THE UNDERLYING ECONOMIC FUNDAMENTALS, WHICH INDICATE AN EXPORT-LED ECONOMIC RECOVERY.+
THE ECONOMIC PERFORMANCE AND OUTLOOK OF A NUMBER OF HONG KONG'S MAJOR EXPORT MARKETS HAD IMPROVED, WITH THE RESULT THAT THE TERRITORY'S DOMESTIC EXPORT GROWTH HAD GATHERED MOMENTUM SINCE THE BEGINNING OF THIS YEAR, SIR JOHN SAID.
IN THE FIRST HALF OF THIS YEAR, DOMESTIC EXPORTS OF GOODS INCREASED BY 14 PER CENT IN MONEY TERMS, OR NINE PER CENT IN REAL TERMS OVER THE SAME PERIOD OF LAST YEAR.
DOMESTIC EXPORTS TO THE U.S. GREW BY 16 PER CENT IN REAL TERMS AND TO CHINA BY 28 PER CENT.
/OVER THE