WEDNESDAY, FEBRUARY 27, 1985
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DOLLAR LINK SERVES HK WELL+
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THE ARRANGEMENT LINKING THE HONG KONG DOLLAR TO THE U.S. DOLLAR HAD SERVED HONG KONG WELL AND WOULD NOT LIGHTLY BE CHANGED, SIR JOHN BREMRIDGE SAID TODAY.
THE STABILITY OF THE HONG KONG DOLLAR IN TERMS OF THE U.S. DOLLAR UNDER THE LINKED EXCHANGE RATE SYSTEM, AND A CONSEQUENT STRENGTHENING AGAINST ALL OTHER MAJOR CURRENCIES DURING THE YEAR, WAS ONE OF THE MAJOR CONTRIBUTORY FACTORS TO THE STEADY FALL IN THE RATE OF INFLATION FROM A YEAR-ON-YEAR RATE OF 12.4 PER CENT IN JANUARY TO 4.6 PER CENT IN DECEMBER, SIR JOHN POINTED OUT.
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THE AVERAGE FOR 1984 AS A WHOLE WAS 8.1 PER CENT COMPARED WITH 9.9 PER CENT RECORDED IN 1983.
DESPITE THE BACKGROUND OF UNCERTAINTY ABOUT HONG KONG'S FUTURE AND VOLATILE CONDITIONS IN WORLD FOREIGN EXCHANGE MARKETS DURING A LARGE PART OF 1984, THE HONG KONG DOLLAR IN TERMS OF THE TRADE- WEIGHTED INDEX STRENGTHENED BY 11 PER CENT DURING THE YEAR, SAID SIR JOHN.
+IT HAS CONTINUED TO STRENGTHEN SO FAR THIS YEAR, HE ADDED.
+THE ADOPTION OF THE LINKED EXCHANGE RATE SYSTEM HAS IN EFFECT ACCORDED PRIORITY TO A STABLE EXCHANGE RATE AGAINST THE U.S. DOLLAR, WITH ADJUSTMENTS TO PRESSURES ON THE HONG KONG DOLLAR FALLING, AT LEAST INITIALLY, ON INTEREST RATES AND THE MONEY SUPPLY, SIR JOHN SAID.
HE ADDED THAT THESE PRESSURES WERE SUBSTANTIAL ON OCCASIONS DURING THE YEAR, AND THERE WERE, THEREFORE, CONSIDERABLE SHORT-TERM FLUCTUATIONS IN INTEREST RATES AND IN THE GROWTH RATE OF THE MONEY SUPPLY.
HOME OWNERSHIP FUND STANDS ON OWN FEET
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THERE WAS NO NEED THIS YEAR TO TRANSFER FUNDS TO THE HOME OWNERSHIP FUND BECAUSE IT HAD SUFFICIENT RESERVES AS A RESULT OF THE INTERNAL GENERATION OF REVENUE, SAID SIR JOHN.
THIS HAD ALSO BEEN THE CASE LAST YEAR.
+IN FACT, IT IS OUR INTENTION DURING THE YEAR AHEAD TO MOVE SOME $400 MILLION FROM THIS FUND TO GENERAL REVENUE.+
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