TNAG-0382-FCO40-428-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1974 — Page 70

HK

FINANCIAL TIMES

ME

(4 cutting dated

17 DEC 1973

w(251

19

SEISEN

H.K.

བ་པ་ས་་ཅ་་ FuË;"

H.K. official sterling reserves guaranteed

HONG KONG, Dec. 15.

THE HONG Kong Government £700m. of which between one Their exclusion from the new has-announced that it has reached third and a quarter were held agreement will not cause any an understanding with Britain, by the banks and were not official problems, the sources said.

*government reserves.

The Government statement under which the colony's official

According to to-day's announce made no mention of whether the sterling reserves will be guaran- ment the new agreement speci- present agreement made a pro- teed until March 31 at the rate fically excludes the sterling vision allowing Hong Kong to of $2.4213 to the pound.

balances held by local banks. It diversify out of sterling over A Government spokesman said said the decision to exclude the next few months.

Under the previous agreement it was the result of detailed dis- the banks' holdings from the

guarantee reflects the fact that Hong Kong was obliged to keep cussions over some months in the sterling holdings of local 89 per cent. of its reserves in volving the application to Hong banks are no longer judged to sterling. Hong Kong's financial Kong of the unilateral offer hy be sufficient to warrant. their secretary Philip Haddon Cave the British Government last

commented, however, that the September that it would continue

Informed banking sources said new agreement was satisfactory to guarantee certain sterling re- the local banks had been selling to both the British and Heng serves for six months at the new sterling for some time and had Kong Governments.

inclusion."

K

rate of $2.4213 after the expiry now diversified their holdings. Reuter

of the Basle agreement.

Under the five-year Basle

agreement which expired on September 24, all Hong Kong's sterling holdings were protected at $2.40 to the pound. In return,. Hong Kong agreed to deposit 89 per cent. of its foreign reserves belonging to the colonial govern-. ment or commercial banks in London.

The Hong Kong governmeat does not publish figures of re- serves, but last September they were estimated at around

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