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Supply of exchange fund bills to increase
The Hong Kong Monetary Authority (HKMA) today (Friday) announced that with effect from November 12, it will increase the tender and reserve amounts of the 3-month and 6-month exchange fund bills to facilitate the smooth implementation of the Real Time Gross Settlement (RTGS) system in early December.
Under the RTGS system, banks can make use of exchange fund bills and notes to obtain interest free intraday liquidity by carrying out intraday repurchase (repo) transactions with HKMA.
A recent survey conducted by HKMA indicates that many banks intend to increase their holding of short-term, 3-month and 6-month, exchange fund bills for this
purpose.
The tender and reserve amounts of the 3-month and 6-month Exchange Fund Bills will be increased as follows:
Existing amount
Proposed amount
Tender amount
Reserve
Tender amount
Reserve
91-day Bills
$1,500 mn
$300 mn
$2,000 mn (+ $500 mn)
182-day Bills
$800 mn
$160 mn
$1,000 mn (+ $200 mn)
300 mn
$500 mn (+ $200 mn)
(+$140 min)
After a full cycle of 13 issues, the amounts of exchange fund bills outstanding will be increased by $13.5 billion.
The Exchange Fund Bills Programme was launched in March 1990 to provide an additional instrument for HKMA to conduct open market operations. The Programme also helps develop the Hong Kong dollar debt market by providing a benchmark yield curve at the short end.
The demand for exchange fund bills has been very strong with average over- subscription rates of three to four times at tenders. Daily turnover rate typically amounts to 30 per cent of the average amount outstanding.
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