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2.
Exchange rate
5.
Under the linked exchange rate system, the Hong Kong dollar has remained stable against the US dollar,
staying close to the linked rate of HK$7.80 to US$1.
Reflecting the movements of the US dollar against other
major currencies, the trade-weighted exchange rate index, which gauges the overall exchange value of the Hong Kong dollar, rose from 60.3 at the end of April to 62.2 in
mid-August but dropped back sharply to 60.6 in the week
ended 21 August. The Government has made it clear publicly that it has no intention of changing the present link.
Capital investment
6.
Reflecting sustained investment intentions,
retained imports of capital goods rose by about 25% in real terms in the first half of 1987 over a year earlier: the increase in retained imports of industrial machinery for use in the manufacturing sector was 19%. Building and construction activities have picked up considerably, and trading in the property market continues to be active.
Economic outlook for the coming months
7.
The level of retained imports of raw materials and semi-manufactures and the order-book positions of manufacturers suggest that export performance would remain good in the coming months. The Financial Secretary's forecast in his February Budget speech of a real GDP growth rate of 6.2% for 1987 now appears conservative. A revised forecast will be announced on 21 September.
G.F. 326
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