XN000022-1983-01-03 — Page 5

MONDAY, JANUARY 3, 1963

THE CENSUS AND STATISTICS DEPARTMENT WILL CONTINUE TO PUBLISH THE INDEX EVERY BUSINESS DAY, ON THE BASIS OF EXCHANGE RATES QUOTED IN THE MARKET AT APPROXIMATELY 3.30 PM (11.30 AM ON SATURDAYS). FOR THE CURRENT MONTH, JANUARY 1983, BOTH THE OLD AND THE NEW SERIES WILL BE PUBLISHED EACH DAY. THEREAFTER, THE OLD SERIES WILL BE DISCONTINUED AND THE INDEX WILL BE AVAILABLE ONLY ON THE BASIS OF 1981 WEIGHTS.

A GOVERNMENT SPOKESMAN SAID THAT THE TRADE-WEIGHTED EXCHANGE RATE INDEX, WHICH IS ALSO KNOWN AS THE EFFECTIVE EXCHANGE RATE INDEX, IS USEFUL AS AN INDICATOR OF THE AVERAGE POSITION OF THE HONG KONG DOLLAR AGAINST A FIXED BASKET OF OTHER CURRENCIES, RATHER THAN AGAINST A SINGLE ONE.

THE 15 COUNTRIES WHOSE CURRENCIES ARE INCLUDED ARE SELECTED ON ACCOUNT OF THEIR IMPORTANCE IN HONG KONG'S TRADE AND WORLD TRADE, AND THE WEIGHTS REFLECT THE RELATIVE IMPORTANCE OF EACH OF THE 15 COUNTRIES IN HONG KONG'S VISIBLE TRADE. THUS, THE WEIGHT FOR THE US DOLLAR HAS BEEN REDUCED FROM 27.19 PER CENT TO 23.14 PER CENT REFLECTING A REDUCTION IN THE RELATIVE IMPORTANCE OF TRADE WITH THE UNITED STATES, WHILE THE MARKED INCREASE IN RECENT YEARS IN HONG KONG'S TRADE WITH CHINA HAS LED TO AN INCREASE FROM 10.61 PER CENT TO 17.99 PER CENT IN THE WEIGHT ATTACHED TO THE RMB.

THE SPOKESMAN NOTED, BY WAY OF ILLUSTRATION, THAT ON DECEMBER 31, 1982 THE OVERALL INDEX, CALCULATED WITH THE NEW, 1981 WEIGHTS, STOOD AT 79.5, WITH THE IMPORT-WEIGHTED INDEX AT 77.3 AND THE EXPORT-WEIGHTED INDEX AT 82.7, WHEREAS WITH THE OLD, 1972 WEIGHTS, THE CORRESPONDING INDEXES WERE 80.1, 76.8 AND 84.3 RESPECTIVELY.

HE SAID THESE DIFFERENCES REFLECTED ONLY THE FACT THAT CURRENCIES WITH INCREASED WEIGHTS HAD, ON AVERAGE, APPRECIATED SLIGHTLY MORE AGAINST THE HONG KONG DOLLAR THAN CURRENCIES WITH DECREASED WEIGHTS. AS A FURTHER ILLUSTRATION, DURING 1982 THE TRADE-WEIGHTED EXCHANGE VALUE OF THE HONG KONG DOLLAR DEPRECIATED BY 6.9 PER CENT ACCORDING TO THE OLD INDEX AND BY 6.8 PER CENT ACCORDING TO THE NEW ONE.

DESPITE SOME SIGNIFICANT CHANGES TO THE WEIGHTS OF INDIVIDUAL CURRENCIES, THEREFORE, THE RESULTING INDEX IS LITTLE DIFFERENT.

THE SPOKESMAN NOTED, HOWEVER, THAT IT WAS NEVERTHELESS DESIRABLE TO UP-DATE THE WEIGHTS FROM TIME TO TIME. HE EMPHASISED THAT THE SLIGHTLY LOWER LEVEL FOR THE NEW INDEX COMPARED TO THE OLD WAS MERELY THE RESULT OF THIS TECHNICAL RECALCULATION AND DID NOT MEAN THAT THE HONG KONG DOLLAR HAD SUDDENLY DEPRECIATED BY THE AMOUNT OF THE DIFFERENCE.

THE TRADE-WEIGHTED INDEX WAS THE SUBJECT OF A SPECIAL REVIEW ARTICLE IN THE APRIL 1976 ISSUE OF THE HONG KONG MONTHLY DIGEST OF STATISTICS AND IT IS PLANNED TO PUBLISH AN UPDATED VERSION OF THAT ARTICLE IN DUE COURSE, WHICH WILL DESCRIBE IN DETAIL THE COMPILATION OF THE INDEX USING THE 1981 WEIGHTS.

ENQUIRIES SHOULD BE DIRECTED TO THE TRADE RESEARCH SECTION OF THE CENSUS AND STATISTICS DEPARTMENT AT TELEPHONE NO. 5-444402.

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