XN000022-1990-05-31 — Page 5

THURSDAY, MAY 31, 1990

LATEST MONETARY DEVELOPMENTS REVIEWED

* * * *

THE

NENDICK, THIS

SECRETARY FOR MONETARY AFFAIRS, MR DAVID (THURSDAY) EVENING REVIEWED RECENT MONETARY DEVELOPMENTS AND ALLAYED CONCERN OVER WHAT HAS BEEN SEEN AS A NEW DECLINE IN THE SHare of HONG KONG DOLLAR DEPOSITS IN TOTAL DEPOSITS.

ADDRESSING THE ANNUAL DINNER OF THE HONG KONG INSTITUTE OF ECONOMIC SCIENCE, MR NENDICK SAID THERE HAD BEEN A CONTINUOUS GROWTH IN HONG KONG DOLLAR DEPOSITS AND THE GROWTH RATE AT 15.5 PER CENT FOR 1989 WAS INDEED HIGHER THAN THE GROWTH RATE OF GROSS DOMESTIC PRODUCT IN MONEY TERMS.

"GIVEN THAT THE GROWTH OF THE HONG KONG DOLLAR DEPOSIT BASE HAS AT LEAST KEPT UP WITH THE EXPANSION IN THE ECONOMY, IT SEEMS THAT THE FACTS DO NOT SUPPORT THE PREMISE THAT HONG KONG RESIDENTS, WHETHER BUSINESSES OR INDIVIDUAL, HAVE BEEN SHIFTING FROM HONG KONG DOLLARS INTO FOREIGN CURRENCIES TO ANY GREAT EXTENT.

"OR AT LEAST, IF THEY HAVE, THERE MUST HAVE BEEN A MATCHING INCREASE IN THE HOLDING OF HONG KONG DOLLAR DEPOSITS BY NON-RESIDENTs.

"OVER THE LAST TWO YEARS, SAVINGS DEPOSITS, WHICH ONE WOULD EXPECT TO BE MAINLY HELD BY RESIDENTS, HAVE BEEN GROWING AT LESS THAN HALF THE PACE OF TIME DEPOSITS A MEDIUM MORE LIKELY TO BE USED BY NON-RESIDENTS,' MR NENDICK SAID.

T

―

IT

"WHILE THIS LENDS SOME CREDENCE TO THE SECOND SUPPOSITION, MAY ONLY INDICATE THAT SMALL SAVERS IN HONG KONG HAVE BECOME INTEREST- KATE CONSCIOUS," HE ADDED.

MR NENDICK STRESSED THAT THERE WAS NOTHING NEW ABOUT A DECLINE IN THE SHARE OF HONG KONG DOLLAR DEPOSITS IN TOTAL DEPOSITS.

"HONG KONG DOLLAR DEPOSITS HAVE BEEN DECLINING AS A PROPORTION

OF TOTAL DEPOSITS SINCE THE EARLY 1980'S.

TH

'ADJUSTED FOR SWAP DEPOSITS BOOKED LOCALLY, THE STOOD AT 43.3 PER CENT AT THE END OF MARCH 1990 COMPARED PER CENT AT THE END OF 1984.

PROPORTION

WITH 60.1

"BUT THE EIGURE HAS BEEN WITHIN ABOUT TWO PERCENTAGE POINTS OF 45 PER CENT SINCE MID-1988 AND HAS THEREFORE BEEN BROADLY STABLE FOR NEARLY TWO YEARS.

"CERTAINLY IT IS NOT A PHENOMENON WHICH CAN BE ASCRIBED ΤΟ EVENTS IN CHINA LAST JUNE," HE SAID.

HE

POINTED OUT THAT IT WAS NOT THAT HONG KONG DOLLAR DEPOSITS FALLEN OR CEASED TO RISE, BUT THAT FOREIGN CURRENCY DEPOSITS HAD INCREASING EVEN MORE RAPIDLY.

HAD BEEN

THAT

THE EFFECT OF EXCHANGE RATE MOVEMENTS WAS ONE OF THE REASONS LED ΤΟ THE RAPID INCREASE IN POREIGN CURRENCY DEPOSITS, MR NENDICK EXPLAINED.

/"OVER THE

J