TNAG-0448-FCO40-513-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1974 — Page 151

NF 9/548/1

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Foreign and Commonwealth Office

London S.W.1

22 March 1974

His Excellency Sir Murray MacLehose KUNG MBE Governor and Commander-in-Chief

HÙNG LÚNG

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Sir,

1. I have the honour to refer to the attached Declaration made at London on 18 Karch 1974 by the Government of the United Kingdom of Great Britain and Northern Ireland con- cerning the guarantee of certain official sterling balances of Hong Kong.

2.

The Declaration refers to an effective depreciation of sterling from Smithsonian parities, the calculation of which is explained in the attached note.

3. You will note from paragraph 3 (1) of the Declaration that the Kinimum Sterling Proportion for Hong Kong is reduced to 70 per cent.

4. You will also see that we have not retained the provision for locally-held sterling to be eligible for guarantee,

since this is no longer appropriate following the termination of the Exchange Fund guarantee scheme.

5. Subject to the provisions of the Declaration none of the provisions of any other agreements, arrangements or under- standings, whether oral or written, made or reached between the Government of the United Kingdom and the Government of Hong Kong, or their respective agents, for the purposes of applying or interpreting the Sterling Agreement or the previous Declaration will be regarded by the Government of the United Kingdom as in any way affecting the application or interpretation of the present Declaration.

I have the honour to be,

Sir,

Your Excellency's Obedient Servant

for the Secretary of State

SM. Pambridge

CONFIDENTIAL

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