monetary management. This involved the swingeing tobacco tax increase in the budget and its subsequent partial repeal, the ill-judged 1% rise in interest rates and the subsequent reduction, and finally the increase in the deposit required on house purchases in an attempt to curb speculation.
4 Today, it seems, Standard Chartered was the most affected with
heavy withdrawals from about 40 branches. HK$3 bn of notes had
been issued over the counters and there was an unknown volume of
cheques in the inter-bank clearing this evening. Standard Chartered had had access to adequate inter-bank liquidity, but the Exchange Fund will be increasing market liquidity by HK$200 mn this evening, bringing the HSBC account with the Exchange Fund up from
HK$600 ma to HKS800 mn. The Hong Kong Association of Banks will be
reducing their prime lending rate by 1/03 with effect from Monday.
三
The main problem for Standard Chartered has been ensuring an
adequate physical supply of bank-notes to their counters and as ཌུ
result of the reased issue they will be inc Ing an open
foreign exchange position possibly in excess of their limiz.
Yam's
view was that Standard Chartered will need a further HK$5 bn of
bank-notes for tomorrow - but presumably only if the notice issued
by them today does not have the desired effect.
Developing World Division HO-3
Asia & Australasia
9 August 1991
C D Elston (4265)
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