TNAG-2466-FCO40-3590-Economic-situation-in-Hong-Kong-1992 — Page 36

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devaluation was in 1949 but the fixed sterling value

of the Hong Kong dollar was not changed on that occasion.

However, in 1967 the Hong Kong dollar was not devalued

So until 1967 the rate

to the same extent as sterling.

was HK$16 to the pound and from November 1967 to 1972

the rate against the pound was HK$14.5454. Soon after

the outbreak of the second world war Hong Kong became

part of what was known as the Overseas Sterling Area;

this meant operating within the net of exchange controls

set by the UK authorities.

3.

When sterling was floated in June 1972 and

the Sterling Area was dismantled, a fixed central rate

of exchange against the US dollar of HK$5.65 to one US

The Government then undertook

dollar was established.

to hold the Hong Kong dollar within a narrow margin around

that central rate. This arrangement lasted until November

1974 with one change in the central rate in February

1973 following a 10% reduction in the par value of the

US dollar in terms of gold and Special Drawing Rights.

In November 1974 as a result of upward pressure on the

Hong Kong dollar resulting from a worldwide weakness

of the US dollar it was decided that there was no alternative

but to allow the Hong Kong dollar to float. From November

1974 to 16 October 1983, the Hong Kong dollar floated

freely, in common with currencies of other major market

/economies.

G.F. 316

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