XN000022-1972-12-13 — Page 16

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Wednesday, December 13, 1972

STATEMENT ON HONG KONG'S STERLING RESERVES

The Financial Secretary, the Hon. C.P. Haddon-Cave, today described

the current year as an exceptional one in the international monetary field

and said that many of the decisions taken in the financial capitals of the

world have had a very special significance for Hong Kong.

Speaking in the Legislative Council this afternoon, he said that

while our reserves had suffered serious losses in both Hong Kong and U.S.

dollar terms it was a tribute "to the underlying strength of our position that

confidence in the exchange stability of the Hong Kong dollar remains un-impaired."

The Financial Secretary said that at the time of the floating of the

Pound Sterling, the value of the sterling assets held by the Hong Kong Government,

including those bank-owned assets guaranteed under the Exchange Fund Guarantee

Scheme, amounted to approximately £900 million.

In terms of Hong Kong dollars, the whole of the loss resulting from

the complicated and quite unforeseen sequence of events following the declino

in the value of Sterling from US $2.6057 to US $2.40 fell on public funds. The

loss came to approximately HK $890 million.

The Financial Secretary emphasized, however, that while this figure

represented an "accurate picture" it should not be taken as "exact" since

the rate not only continued to fluctuate but also the amounts held were

constantly changing.

The losses, he said, should be viewed against the advantages Hong Kong

had received from having invested in Sterling.

"Interest