TNAG-0381-FCO40-427-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 194

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telegram to:

GOVERNOR HONG KONG

1.

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Ahn Stuart

SECRET

Here is no telegram

Thators would like to jo

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contour?

Your tel No 1133: Sterling Agreement

We are most grateful for the estimates and other

under reference material set out in your telegram No 133 of 5 October

but we are still not sure that we precisely understand

the complete picture. Can you please give further help

therefore in filling it in?

2. We would be grateful for further clarification of

the figures in your paragraphs 1 and 2. Are the "banks

ready positions" of £213 million at 31 August directly

comparable with the £295 million advised by the Accountant General for 31 July? Af so, it appears that the banks

shed £82 million spot during the month, which is hard to

reconcile with the £6 million a week provided for in

Mrs Hedley Miller's letter of 10 August If so, please confirm our understanding that the banks' "net overbought

positions" at 31 August represent £213 million spot

holdings less £103 million forward sales.

3. Are we right in assuming that the £60 million net

overbought position, estimated in your paragraph 2,

represents the maximum amount of sterling that you consider

that the banks will still be holding spot after forward

sales, estimated as at 5 October, have matured. L 00,

the sum is very much less than the £190 million below which

the Hong Kong Government representatives estimated, at the

meeting at the Treasury on 10 August, that the banks would

not wish to g0.7

4. If our assumption on paragraph 3 above is correct, we would appreciate your views on whether the banks are likely to sell off still more of their sterling.

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