1983
WEDNESDAY, DECEMBER 21, 1983
NEW CURRENCY PLAN AIM FULFILLED SO FAR SIR JOHN
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THE HONG KONG DOLLAR HAS NOT DEPRECIATED SINCE THE CURRENCY STABILISATION SCHEME WAS ANNOUNCED ON OCTOBER 15, THE FINANCIAL SECRETARY, THE HON SIR JOHN BREMRIDGE, TOLD THE LEGISLATIVE COUNCIL TODAY.
REPLYING TO A QUESTION FROM THE HON PETER C WONG, SIR JOHN POINTED OUT THAT THE EFFECTIVE INDEX RATE AGAINST A BASKET OF CURRENCIES HAD ACTUALLY APPRECIATED FROM 63.9 TO 68.6.
AGAINST THE LINKED RATE OF HK$7.80 TO US$1, HE SAID, THE MOVEMENT OF THE HONG KONG DOLLAR HAS BEEN LIMITED TO 0.25 PER CENT.
+THIS IS REMARKABLE, GIVEN THE EXTRAORDINARY RECENT STRENGTH OF THE U.S. DOLLAR, WHICH HAS CREATED HAVOC WITH OTHER MAJOR INTERNATIONALLY-TRADED CURRENCIES, SIR JOHN SAID.
+ IN OTHER WORDS, SO FAR OUR NEW CURRENCY ARRANGEMENTS HAVE FULFILLED THEIR PURPOSE.+
BUT DAMAGE WAS DONE EARLIER, HE SAID, AND THE DEPRECIATION OF THE HONG KONG DOLLAR UP TO THE LOW POINT IN SEPTEMBER 24 RESULTED IN HIGHER IMPORT PRICES.
+THE RATE OF INFLATION, IN TERMS OF THE CONSUMER PRICE INDEX, STAYED AT AROUND 9 PER CENT DURING THE FIRST NINE MONTHS OF THIS YEAR, BUT PICKED UP TO 12.7 PER CENT IN OCTOBER. THE AVERAGE FOR 1983 AS A WHOLE IS LIKELY TO BE AROUND 10 PER CENT, ROUGHLY THE SAME AS IN 1982.
+BECAUSE IT TAKES TIME FOR HIGHER IMPORT PRICES TO WORK THROUGH THE ECONOMY, RETAIL PRICES TO CONSUMERS ARE AFFECTED ONLY AFTER A TIME LAG OF SEVERAL MONTHS.
+THUS, THE RATE OF INFLATION IN THE FOURTH QUARTER OF THIS YEAR AND IN THE EARLY MONTHS OF NEXT YEAR IS LIKELY TO RISE HIGHER AS A RESULT OF THE RAPID DEPRECIATION IN SEPTEMBER.+
BUT THE EFFECT OF THE DEPRECIATION OF THE EXCHANGE RATE ON PRICES WAS LIKELY TO BE DAMPENED BY A NUMBER OF OTHER MORE FAVOURABLE FACTORS, SIR JOHN POINTED OUT.
+LOCALLY, AGGREGATE DEMAND FOR RESOURCES IN THE ECONOMY IS NOT IMPOSING MUCH PRESSURE ON AGGREGATE SUPPLY AND THE GENERAL PRICE LEVEL AND THE UNDERLYING GROWTH RATE OF THE MONEY SUPPLY IS MODERATE. EXTERNALLY, THE RATE OF INFLATION IN HONG KONG'S MAJOR TRADING PARTNERS HAS SLOWED DOWN.
+MOREOVER, THE CURRENCY STABILISATION MEASURES WILL CERTAINLY HAVE A DAMPENING EFFECT ON THE RATE OF INFLATION IN DUE COURSE.
+MOREOVER, THE DEPRECIATION OF THE HONG KONG DOLLAR HAS ENHANCED HONG KONG'S EXTERNAL COMPETITIVENESS AND HAS CONTRIBUTED TO THE IMPRESSIVE PERFORMANCE OF THE EXPORT SECTOR THIS YEAR.
/+ANOTHER MAJOR