XN000022-1973-03-28 — Page 33

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Wednesday, March 28, 1973

This, he added, had not been an easy task "for many countries are unwilling to accept investments in their currencies in other than modest

amounts on any reasonable terms."

Noting the fears expressed that Hong Kong might price itself

out of overseas markets as a result of rising costs, the Financial

Secretary said it should not be so easily concluded that Hong Kong was "becoming uncompetitive."

He pointed out that despite the difficulties in 1971 and 1972,

the value of Hong Kong's exports had expanded by more than 10 per cent in both years.

The Gross Domestic Product had also increased by 10 per

cent in 1971. and 17 per cent in the following year while a full employment

situation and a booming economy were maintained.

Strength

In his view, these were in direct "testimony to the strength of

the Hong Kong economy over this period rather than the opposite."

"In these circumstances, and given the overwhelming importance

of external trade to our economy, the best policy for the exchange rate of the Hong Kong dollar is stability," he stressed.

By this he meant stability in relation to the average of other

currencies as a whole.

He explained that in these terms, Hong Kong had more or less broken even over the last two years, although the Hong Kong dollar had appreciated in relation to both the pound sterling and U.S. dollar due

to their devaluations or downward floats.

The Financial