TNAG-0379-FCO40-425-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 146

GPS 100

IMMEDIATE

CYPHER/CAT A

FM HONG KONG 090850Z

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TO IMMEDIATE FCO TELNO 741 OF 9 JULY. 1973

MY TELEGRAM 728.

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U.S. DOLLAR CRISIS AND STERLING GUARANTEE AGREEMENT.

WHEN THE MARKET CLOSED AT 3.30 P.M. TODAY WE HAD BOUGHT US DOLLARS 24 MILLION AT HONG KONG DOLLARS 4.97 1/16 (1.E. A

FRACTION OVER THE FLOOR RATE), THERE WAS SOME BANK SUPPORT ALSO: AND, UNUSUALLY FOR THESE DAYS, THERE WAS A SURPLUS OF STERLING.

THE HONG KONG BANK ALONE BOUGHT POUNDS STERLING 6 MILLION.

THE BANK OF CHINA WAS NOT IN THE MARKET.

2. WE HAVE NOW BREACHED OUR M.S.P. (BUT ONLY SLIGHTLY) AND AWAIT

DEVELOPMENTS TOMORROW. AT ONE STAGE WE WERE WORRIED THAT

JAPANESE BANKS HERE WERE ABOUT TO OFFER LARGE QUANTITIES OF

DOLLARS, BUT TOWARDS THE CLOSE OTHER BUYERS APPEARED AND THIS

STEADIED THE MARKET.

MACLEHOSE

FINANCIAL DISTRIBUTION:

FRD HKIOD

SECRET