XN000022-1987-09-25 — Page 4

FRIDAY, SEPTEMBER 25, 1987

3

NEW SERIES OF EFFECTIVE EXCHANGE RATE INDEXES

A NEW SERIES OF EFFECTIVE EXCHANGE RATE INDEXES (EERI) WILL BE PUBLISHED BY THE CENSUS AND STATISTICS DEPARTMENT AS FROM MONDAY (SEPTEMBER 28).

THERE ARE THREE MAJOR IMPROVEMENTS IN THIS NEW SERIES OVER THE OLD SERIES.

OF EERI

FIRST, A NEW BASE PERIOD, OCTOBER 24-28, 1983, WILL REPLACE THE BASE DATE OF DECEMBER 18, 1971 USED IN THE OLD SERIES.

THIS NEW BASE PERIOD IS CHOSEN BECAUSE IT IS CLOSE ΤΟ OCTOBER 17, 1983, THE DATE ON WHICH THE HONG KONG DOLLAR (HKD) STARTED ITS LINK WITH THE U.S. DOLLAR, AND ALSO BECAUSE THE HKD'S EXCHANGE RATE AGAINST MOST MAJOR CURRENCIES STARTED TO STABILISE ON OCTOBER 24,

1983.

AS THE NEW BASE PERIOD IS MORE RECENT AND FAMILIAR TO THE PUBLIC, USERS SHOULD BE BETTER ABLE TO ASSESS THE CHANGES IN THE EERI IN RELATION TO THE SOCIO-ECONOMIC CHANGES WHICH HAVE OCCURRED SINCE THE BASE PERIOD.

SECOND, DUE TO THE SIGNIFICANT CHANGES IN RECENT YEARS IN HONG KONG'S TRADE PATTERN, THE TRADE WEIGHTS BASED ON THE TRADE PATTERNS OF 1981, WHICH WERE USED IN THE EXISTING EERI SERIES ARE NO LONGER REPRESENTATIVE.

TO REFLECT THE MORE RECENT TRADE PATTERNS, A SET OF WEIGHTS, BASED ON THE AVERAGE TRADE PATTERNS OF 1984 TO THEREFORE BEEN SELECTED FOR COMPILING THE NEW ERRI SERIES NEW BASE PERIOD ONWARDS.

NEW TRADE 1986, HAS FROM THE

IS MORE PLACE OF THIS NEW

EERI,

THIRD, IN THE NEW SERIES, GEOMETRIC AVERAGING WHICH APPROPRIATE FOR AVERAGING RATES OF CHANGE WILL BE USED IN ARITHMETIC AVERAGING IN THE FORMULA FOR COMPILING THE EERI. AVERAGING METHOD WILL ENSURE THAT THERE WILL BE NO BIAS IN AND WILL BRING THE COMPILATION METHOD FOR THE EERI IN LINE INTERNATIONAL PRACTICE.

THE

ACCURACY

WITH

AND

THE ABOVE CHANGES WILL IMPROVE THE REPRESENTATIVENESS OF THE EERI IN MEASURING THE RELATIVE STRENGTH OF

THE HKD.

/THREE SEPARATE