XN000022-1977-02-23 — Page 2

WEDNESDAY, FEBRUARY 23, 1977

EFFECTIVE EXCHANGE RATE INDEX ******

THE GOVERNMENT WILL BE MAKING AVAILABLE EACH DAY FROM TODAY ONWARDS DAILY MOVEMENTS IN THE EFFECTIVE EXCHANGE RATE INDEX FOR THE HONG KONG DOLLAR.

IN ADDITION, AS FROM THE JANUARY ISSUE, FIGURES FOR THE INDEX WILL ALSO BE PUBLISHED IN THE MONTHLY DIGEST OF STATISTICS.

THE INDEX MEASURES THE MOVEMENT OF THE HONG KONG DOLLAR AGAINST AN AVERAGE OF THE CURRENCIES OF 15 OTHER COUNTRIES WEIGHTED ACCORDING TO THE VALUE OF THEIR RESPECTIVE TRADE WITH HONG KONG IN 1972. IT IS BASED ON THE CENTRAL RATES AGREED UPON AT THE SMITHSONIAN AGREEMENT ON DECEMBER 18, 1971.

THE INDEX WAS DESCRIBED IN DETAIL IN THE SPECIAL REVIEW ARTICLE IN THE MONTHLY DIGEST OF STATISTICS FOR APRIL 1976 AND HAS BEEN USED IN GOVERNMENT ECONOMIC REPORTS BUT HAS NOT HITHERTO BEEN MADE PUBLICLY AVAILABLE ELSEWHERE.

+ IT IS USEFUL BECAUSE CHANGES IN THE US DOLLAR VALUE OF THE HONG KONG DOLLAR DO NOT ALWAYS REFLECT CHANGES IN THE OVERALL EXTERNAL PURCHASING POWER OF THE HONG KONG DOLLAR,+ A SPOKESMAN FOR THE MONETARY AFFAIRS BRANCH SAID.

FOR EXAMPLE, HE ADDED, THE STRENGTH OF THE HONG KONG DOLLAR AGAINST THE US DOLLAR MIGHT BE OFFSET TO A GREATER OR LESSER EXTENT BY A WEAKENING OF US DOLLAR IN TERMS OF OTHER MAJOR CURRENCIES,

+ THE INDEX, THEREFORE, MEASURES MORE ADEQUATELY THE TRUE FOREIGN EXCHANGE VALUE OF THE HONG KONG DOLLAR,+ THE SPOKESMAN SA ID.

THE FOLLOWING TABLE GIVES THE EFFECTIVE EXCHANGE RATE INDEXES FOR THE HONG KONG DOLLAR SINCE THE BEGINNING OF THIS YEAR AND THOSE OF THE PAST FEW YEARS

EFFECTIVE EXCHANGE RATE INDEX FOR

THE HONG KONG DOLLAR

(DEC. 18, 1971-100)

1973

103.7

1974

105.9

1975

107.4

1976 JAN.

107.6

FEB.

108.3

MAR,

109.4

APR.

110.1

MAY

111.5

JUNE

109.8

JULY

109.6

AUG.

109.7

SEPT.

110.0

OCT.

111.4

NOV.

113.7

DEC.

114.4

/ADOVI