5
12.
On the financial sector, the following
developments during the first quarter are
noteworthy.
First, the market exchange rate of
the Hong Kong dollar remained stable against the
US dollar, while the overall exchange value of
the Hong Kong dollar showed a moderate
appreciation, in line with the firming up of the
US dollar. Secondly, continuing the trend which
began in 1988, local interest rates rose
further.
Despite this, domestic loans and
advances continued to increase rapidly.
Thirdly, trading in local stocks and in Hang
Seng Index futures picked up.
However, the
market for debt instruments remained relatively
quiet.
13.
The Government Economist indicated
that it was in the light of these developments,
that it was decided that the forecast growth
rates of the main domestic demand components
should remain substantially unchanged from those
released at the time of the Budget Speech.
However, it was considered appropriate to lower
the forecast growth rate of domestic exports
from 7% to 6%, and that of re-exports from 22%
to 18%, both in real terms.
Correspondingly,
the forecast growth rates of imports and
t
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