THE STAR
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2017/9
Britain extends reserves guarantee
BRITAIN will continue to guarantee Hongkong's sterling reserves after the expiry later this month of the present sterling agreement, the British Treasury said today.
The extension will also apply to other sterling area countries, the announcement said.
The decision has been com- municated to all sterling agree- ment nations by Chancellor of the Exchequer Anthony Barber, the announcement said.
The announcement caused an
upsurge in the price of sterling.
The new guarantee was given as 2.4213 dollars per pound sterling, the average of the ex- change rates at noon on the last three days.
The guarantee takes effect if the average of daily rates for sterling in terms of the U.S. dollar throughout the six-month period · drops below the guarantee level.
Coverage under the agreement will be guaranteed through the sixth-month period provided the countries broadly maintain their
sterling holdings at present levels.
The Treasury announcement said the sterling agreements have provided a "valuabled element of stability in the international monetary scene", and it was therefore considered worthwhile to continue them for a further period.
But it said that Because of con- tinuing uncertainty about, developments on international af- fairs, it would not be sensible at out present to seek to work
for a substantive arrangements » long period."
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