TNAG-0381-FCO40-427-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 100

GR 250

PRIORITY

CYPHER/CAT A

FM FCO 1913452

SECRET

SECRET

EANTRY NO. 24 2300 M2

HKK

(195

hile

PA.

2

ORVELL

TO PRIORITY GOVERNOR HONG KONG TELNO 1054 OF 19 OCTOBER. 1973

YOUR TELNO 1117: STERLING AGREEMENT.

22.x

1. WE ARE CONSIDERING THE PROPOSALS SET OUT IN YOUR TELNO 1117 IN THE LIGHT OF THE INFORMATION AND ESTIMATES FOR THE END-SEPTEMBER POSITION THAT YOU HAVE NOW KINDLY PROVIDED, WE SHALL OF COURSE NEED TO CONSULT MINISTERS, AND IT MAY BE A LITTLE TIME BEFORE WE ARÉ ABLE TO LET YOU HAVE OUR VIEWS. YOU CAN IN THE MEANTIME ASSUME IN THE ABSENCE OF A SUBSTANTIVE REPLY FROM US THAT YOUR POSITION UNDER THE GUARANTEE OFFER WILL NOT BE PREJUDICED PROVIDED THAT THE STERLING PROPORTION IN GOVERNMENT HOLDINGS IS NOT REDUCED BELOW THE 26 SEPTEMBER LEVEL, WHICH WE UNDERSTAND FROM PARAS 3 AND 4 OF YOUR TELNO 1133 TO BE 80.9 PER CENT ON A BOOK VALUE BASIS,

2. WE MUCH APPRECIATE YOUR SUCCESS IN DEFUSING THIS ISSUE AND

IN KEEPING IT OUT OF THE HEADLINES. WE ASSUME THAT YOU WILL CONTINUE TO TAKE THE LINE, IN REPLY TO ANY SPECULATION, THAT DISCUSSIONS ARE STILL CONTINUING AND THAT YOU SEE NO REASONS WHY SATISFACTORY ARRANGEMENTS SHOULD NOT BE AGREED IN DUE COURSE.

3. FOLLOWING HIS TALK WITH HADDOTH-CAVE IN DAR-ES-SALAAM ABOUT THE RENEWAL OF CONTACTS, DARRATT OF THE TREASURY IS IN ANY CASE HOPING TO VISIT HONG KONG TOWARDS THE MIDDLE OF NEXT MONTH, ARE THERE ANY DATES WHICH WOULD BE PARTICULARLY INCONVENIENT AS FAR AS YOU ARE

CONCERNED?

DOUGLAS-HOME

ORWELL DISTRIBUTION

FRD

HIKIOD

PS/MR ROYLE

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