The foreign exchange market
(8)
Despite rather wide
3.10
fluctuations in exchange rates
between major currencies, the trade-weighted exchange rate
index
for the Hong Kong dollar was relatively stable
during the first quarter after the sharp adjustment in the
previous one. Calculated on the basis of 1981 trade weights,
the index, which was 79.5 at the end of 1982, fluctuated
during the quarter in the range of 79.3 to 78.2, being at its
firmest in the two weeks ahead of the Chinese New Year. At
the end of March the index stood at 78.4, representing a net depreciation of 1.4% over the quarter. The import-weighted index fell by 1.4% and the export-weighted index by 1.6%. Renewed downward pressure on the Hong Kong dollar developed in the second quarter.
/3.11 Against
introduced
(8) In January 1983 the Census and Statistics Department
revised weights in the calculation of the trade-weighted exchange rate index for the Hong Kong dollar. The new weights reflect the pattern of Hong Kong's visible trade in 1981, whereas the calculation prior to January 1983 used weights derived from Hong Kong's trade in 1972. The index continues to be based on 18th December 1971 = 100.
The trade-weighted exchange rate index is an indicator of the average position of the Hong Kong dollar against a fixed basket of other currencies. The 15 countries whose currencies are included are selected on account of their importance in Hong Kong's trade and world trade, and the weights reflect the relative importance of the 15 .countries in Hong Kong's visible trade. Thus, the weight for the US dollar has been reduced from 27.2% to 23.1%, reflecting a reduction in the relative importance of trade with the United States, while the marked increase in Hong Kong's trade with China has led to an increase from 10.6% to 18% in the weight attached to renminbi.
Despite some significant changes to the weights of individual currencies, the revised series is little different, as the following comparisons for earlier dates show:
Trade weighted index
calculated with
1972 weights
Trade weighted index
calculated with
1981 weights
As at end of
1981
85.9
85.2
1982
80.1
79.5
1983
Jan
79.8
79.0
Feb
N.A.
78.7
Mar
N.A.
78.4
N.A.
not available
18
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