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TUESDAY, APRIL 28, 1987
LINK SYSTEM NOT TO BE TAMPERED WITH
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THE SECRETARY FOR MONETARY AFFAIRS, MR DAVID NENDICK, TODAY (TUESDAY) REITERATED TO THE GOVERNORS OF THE ASIAN DEVELOPMENT BANK THAT THE HONG KONG/U.S. DOLLAR LINK WOULD NOT BE TAMPERED WITH LIGHTLY.
SPEAKING AT THE 20TH ANNUAL MEETING OF THE BOARD OF GOVERNORS OF THE ASIAN DEVELOPMENT BANK NOW BEING HELD IN OSAKA, JAPAN, MR NENDICK STRESSED THAT HONG KONG, BEING A SMALL AND HIGHLY EXTERNALLY ORIENTATED ECONOMY, MUST LOOK FOR STABILITY BOTH IN ITS INTERNAL ECONOMY AND IN WORLD TRADE.
+ONE CRITICAL ELEMENT OF OUR ECONOMY IS OUR CURRENCY,+ MR NENDICK SAID.
HE POINTED OUT THAT SINCE HONG KONG DOLLAR HAD BEEN LINKED TO THE U.S. DOLLAR IN OCTOBER 1983, HONG KONG'S ENTIRELY FREE AND OPEN ECONOMY CONTINUED TO ADJUST QUICKLY TO ANY EXTERNAL IMBALANCES, BUT THE BURDEN OF ADJUSTMENT NOW FELL ALMOST ENTIRELY ON HONG KONG'S DOMESTIC INTEREST RATES, MONEY SUPPLY AND PRICE LEVELS,
+THE RELATIVE VOLATILITY IN THESE DOMESTIC VARIABLES IS THE PRICE WE PAY FOR THE STABILITY OF OUR CURRENCY AGAINST THE U.S. DOLLAR.
+BUT THAT STABILITY IS OF PROFOUND IMPORTANCE TO HONG KONG, BOTH ECONOMICALLY AND POLITICALLY, AND WILL NOT BE TAMPERED WITH LIGHTLY, MR NENDICK STRESSED.
HE SAID THAT HONG KONG JUST LIKE ALMOST EVERYBODY ELSE, WAS AFFECTED BY THE VOLATILITY OF INTERNATIONAL CURRENCIES OVER THE PAST FEW YEARS.
+ IT IS IN THE INTEREST OF THE WORLD ECONOMY TO SEE MORE STABILITY IN CURRENCY RATES. I HOPE THAT THE INITIATIVES BEING TAKEN IN THE GROUP OF FIVE AND RELATED FORUMS CAN ACHIEVE THIS, HE SAID.
MR NENDICK STRESSED THAT HONG KONG HAD NOT TAKEN UNFAIR ADVANTAGE OF THE LINK WITH THE U.S. DOLLAR.
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+WE HAVE TAKEN THE ROUGH WITH THE SMOOTH, HAVING TO ACCEPT A DOWNWARD ADJUSTMENT OF OUR ECONOMY IN 1985 FOLLOWING A PERIOD WHEN THE U.S. DOLLAR WAS CLEARLY OVER-VALUED IN WORLD TERMS BUT BENEFITTING AS THAT CURRENCY SUBSEQUENTLY DECLINED AGAINST OTHER MAJOR WORLD CURRENCIES.
+1 WOULD POINT OUT, TOO, THAT OVER THE PERIOD SINCE THE LINK WAS ESTABLISHED IN 1983 OUR TRADE ACCOUNT HAS BEEN BROADLY IN BALANCE. THIS YEAR WE EXPECT A MODEST TRADE DEFICIT,+ MR NENDICK SAID.
/TURNING TO