TNAG-0379-FCO40-425-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 141

falls no further and that the MSP is restored soon,

and in any case not later than the end of next month,

We recognise that banking circles and the unofficials

may be concerned about this aspect of the working of

the Agreement, and would suggest that if any

explanation is necessary you should base yourself

on the text of the Agreement between us.

3. On a broader, but clearly related issue, we

have noted that, for example, Malaysia and Singapore

have recently unpegged their currencies from the

dollar when dollar inflows became troublesome.

According to Reuter, the Ren Min Bi has been revalued

by 5 per cent against the Hong Kong Dollar.

occurs to us that the Hong Kong dollar may be

It

, undervalued in relation to a range

of other currencies, with consequential effects on

import prices.

1

2

NIQUTH SML NI MELUNM 29 OL DNISLON