54126/4/46
Your Ref. 3.52892/04
Dear Serpell,
office,
Colonial Office,
Downing Street.
156
30
17 December, 1946.
२१
lett
I enclose a copy of a letter from the Crown Agent for the Colonies concerning Hong Kong telegram No. 1357 regarding the proposed loan. The Crown Agents for the Colonies confirm that they are unlikely to require re-payment of the J.0. F. advances in the near future. Any Londɔn loan could thus probably be floated at a time when the best terms could be obtained for Hong Kong. This is satisfactory.
2. As regards the local issue of the loan, the Governor mentions two points :-
(a) Local firms are unlikely to invest unless
Government state that so far as can be foreseen there is no reason to suppose that present exchange rate between H. K. % and sterling will be varied.
The trouble about a declaration of this kind is that it is liable to be taken as a pledge never to devalue at least while the loan is outstanding. This is a pledge which clearly cannot be given. The difficulty might however be got over by referring to the fact that the provisions of the Bretton foods Agreement, under which the International Monetary Fund has been set up, apply to Hong Kong as to other Colonial currencies. The par value of Hong Kong currency has now been declared by H. \.G. to the Fund as 1/3d and would only be altered in accordance with
D. R. SERPELL, ESQ., 0. B. E.
/the
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