XN000022-1992-08-07 — Page 3

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FRIDAY, AUGUST 7, 1992

OPERATION OF A FAMILY SERVICES

HE ALSO SAW FOR HIMSELF THE CENTRE AND A SOCIAL SECURITY FIELD UNIT.

MR PATTEN THEN MOVED ON TO VISIT TWO HOMES FOR THE AGED AND A PRE-SCHOOL CENTRE IN THE SOUTHERN DISTRICT.

AFTER LUNCH WITH LEADING PERSONALITIES IN THE WELFARE FIELD, HE WENT TO SEE A DAY ACTIVITY CENTRE RUN BY THE HONG KONG ASSOCIATION FOR THE MENTALLY HANDICAPPED.

THE LAST STOP WAS THE PAK TIN SHELTERED WORKSHOP IN WESTERN KOWLOON, WHERE THE GOVERNOR WAS BRIEFED ON THE CURRENT DEVELOPMENTS IN REHABILITATION SERVICES BY THE COMMISSIONER FOR REHABILITATION, ALLAN CHOW.

MR

LINK PROVIDES STABLE MONETARY ENVIRONMENT

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FS

THE GOVERNMENT IS COMMITTED TO MAINTAINING BUSINESS CONFIDENCE IN HONG KONG, AND A KEY FACTOR UNDERPINNING THIS CONFIDENCE IS A STABLE FINANCIAL SYSTEM AND, IN PARTICULAR, THE STABILITY OF THE EXCHANGE RATE.

THIS WAS STATED BY THE FINANCIAL SECRETARY, MR HAMISH MACLEOD, TODAY (FRIDAY) AT THE HONG KONG TEXTILES COUNCIL LUNCHEON WHEN HE TALKED ABOUT THE CHALLENGES AND OPPORTUNITIES FOR HONG KONG'S INDUSTRIES.

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"FOR BUSINESSMEN, WHETHER IN TEXTILES INDUSTRY OR ANY OTHER INDUSTRY OR OPERATION IN HONG KONG, CONFIDENCE MATTERS AND PREDICTABILITY MATTERS, HE SAID, POINTING OUT THAT HE BELIEVED THE CASE FOR RETAINING THE EXISTING LINK WITH THE U.S. DOLLAR WAS OVERWHELMING.

"WE NEED A MONETARY ANCHOR. WE NEED A STABLE AND PREDICTABLE MONETARY ENVIRONMENT. AND THE PARTICULAR SYSTEM THAT WE HAVE HAS STOOD UP MAGNIFICENTLY TO THE TESTS WHICH IT'S BEEN PUT ΤΟ IN THE LAST FEW YEARS, INCLUDING STOCK MARKET CRASH AND EVENTS IN CHINA, HE SAID.

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ON THE "MINI-DEBATE" REVIVED RECENTLY ABOUT THE OLD IDEA OF PEGGING THE HK DOLLAR TO A BASKET OF CURRENCIES, MR MACLEOD SAID: "ONE OF THE ARGUMENTS BEING USED AT PRESENT IS THAT THE HK DOLLAR IS UNDERVALUED AND THAT THIS IS A PRIME CAUSE OF INFLATION. IN OTHER WORDS, THAT WE ARE IMPORTING INFLATION" BECAUSE A WEAK DOLLAR MAKES IMPORTS MORE EXPENSIVE.

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"IT IS A PERFECTLY RESPECTABLE ARGUMENT AS A THEORETICAL ARGUMENT, BUT IT DOESN'T HAPPEN TO FIT WHAT IS HAPPENING IN HONG KONG.

"THE FACTS ARE QUITE DIFFERENT. THE FACTS ARE THAT, FOR EXAMPLE, IMPORT PRICES ROSE BY ONLY ABOUT 2 PER CENT LAST YEAR AND IT SO HAPPENS THAT IN THE FIRST QUARTER OF THIS YEAR, IMPORT PRICES ACTUALLY DECLINED SLIGHTLY.

/"SO THE