XN000022-1983-07-06 — Page 3

WEDNESDAY, JULY 6, 1983

HONG KONG DOLLAR MONEY SUPPLY

THE HKS MONEY SUPPLY ON ALL DEFINITIONS FELL FURTHER IN MAY. THE NARROWEST DEFINITION, HK$M1 DROPPED BY 0.8 PER CENT FOLLOWING A DROP OF 1.6 PER CENT IN APRIL. THE BROADER DEFINITIONS, HK$M2 AND HK$M3 DROPPED BY 0.6 PER CENT AND 1.1 PER CENT RESPECTIVELY, FOLLOWING FALLS OF 1,2 PER CENT IN APRIL.

IN THE THREE MONTHS TO MAY, HK$M1 FELL BY 4.8 PER CENT, HK$M2 BY 3.1 PER CENT AND HK$M3 BY 3.7 PER CENT. OVER THE TWELVE MONTHS, INCREASES WERE RECORDED, AT 11.2 PER CENT, 15.8 PER CENT AND 1.2 PER CENT RESPECTIVELY.

TOTAL MONEY SUPPLY

TOTAL M1 FELL BY 0.1 PER CENT FOLLOWING A 1.0 PER CENT FALL IN APRIL. TOTAL M2 AND TOTAL M3 GREW BY 2.3 PER CENT AND 1.9 PER

IN CENT RESPECTIVELY, COMPARED WITH VIRTUALLY NO CHANGE IN APRIL. THE THREE MONTHS TO MAY, TOTAL M1 FELL BY 4.3 PER CENT WHILE TOTAL M2 AND TOTAL M3 GREW BY 4.0 PER CENT AND 3.5 PER CENT RESPECTIVELY. OVER THE TWELVE MONTHS, THE CORRESPONDING GROWTH RATES WERE 10.6 PER CENT, 46.8 PER CENT AND 30.1 PER CENT,

DEPOSITS

HONG KONG DOLLAR DEPOSITS FELL BY 0.9 PER CENT FOLLOWING A FALL OF 0.7 PER CENT IN APRIL. FOREIGN CURRENCY DEPOSITS GREW BY A SUBSTANTIAL 6.0 PER CENT AFTER A RISE OF 1.7 PER CENT IN APRIL. OVER THE THREE MONTHS, HONG KONG DOLLAR DEPOSITS FELL BY 3.3 PER CENT WHILE FOREIGN CURRENCY DEPOSITS ROSE BY 13.9 PER CENT. OVER THE TWELVE MONTHS, THE CORRESPONDING CHANGES WERE A DROP OF 0.1 PER CENT AND A RISE OF 97.4 PER CENT.

MUCH OF THE INCREASE IN FOREIGN CURRENCY DEPOSITS REPRESENTS AN ADDITION TO THE TOTAL DEPOSIT BASE. BUT SOME REFLECTS A SHIFT AWAY FROM HONG KONG DOLLAR DEPOSITS, PART OF WHICH REFLECTS, IN TURN, THE INCREASING POPULARITY OF SO-CALLED +SWAP+ DEPOSITS. THESE INVOLVE CUSTOMERS BUYING SPOT FOREIGN CURRENCY AND PLACING IT ON DEPOSIT WITH FINANCIAL INSTITUTIONS, BUT AT THE SAME TIME ENTERING INTO A CONTRACT TO SELL FORWARD SUCH FOREIGN CURRENCY BACK TO THE FINANCIAL INSTITUTIONS ON THE MATURITY OF THE DEPOSIT.

THESE SWAPS+ HINDER INTERPRETATION OF THE MONETARY STATISTICS, SINCE FOR CERTAIN ANALYTICAL PURPOSES THEY SHOULD BE REGARDED AS HONG KONG DOLLAR DEPOSITS: FOR EXAMPLE, A SWAP TRANSACTION DOES NOT ITSELF EXERT PRESSURE ON THE EXCHANGE RATE IN THE WAY THAT AN OUTRIGHT FOREIGN EXCHANGE TRANSACTION MAY. HOWEVER, NO STATISTICS ARE AVAILABLE ON THE VOLUME OF SWAP DEPOSITS.

/LOANS AND