ENG-1988 — Page 414

Appendix 7

(Chapter 5: The Economy)

Exchange Value of the Hong Kong Dollar

(A) Historical changes in the exchange rate system

Par value of

the HK$ in

grams of fine gold

£1 =

USSI

HK$

HK$

SDRI= HK$

December 18, 1946

IMF parities established; Hong Kong dollar is pegged to sterling

0.223834

16.00

3.970

September 18, 1949

Hong Kong dollar devalued pari passu with sterling by 30.5%

0.155517

16.00

5.714

November 20, 1967

Hong Kong dollar devalued pari passu with sterling by 14.3%

0.133300

16.00

6.667

November 23, 1967

Hong Kong dollar revalued by 10%, including against sterling, but continues pegged to sterling, at new rate

0.146631

14.55

6.061

December 18, 1971

As part of the general currency realignment, Hong Kong dollar and sterling appreciate by 8.57% against US dollar. As a result of USA terminating, in August 1971, the convertibility of US dollar into gold, gold par value no longer has a practical meaning. IMF begins to adopt the SDR as its accounting unit

July 6, 1972

Hong Kong dollar pegged to US dollar following the floating of sterling

February 14, 1973

US dollar devalued; Hong Kong dollar remains pegged,

at new rate

November 26, 1974

Hong Kong dollar allowed to float, ie the government no longer undertakes to maintain a particular rate against any other currency

October 17, 1983

Hong Kong dollar was linked to US dollar, through a new arrangement in the note-issue mechanism, at a fixed exchange rate of HK$7.80=US$1

[ ]

14.55

5.582

6.061

5.650

6.134

5.085

6.134

357

(B) Exchange rates of the Hong Kong dollar against several major currencies

Effective exchange rate* (24-28 Oct 1983=100)

£

US$

DM

¥

SDR

End of period

(HK dollars to one unit of foreign currency)

1974

11.53

4.910

2.03

0.0164

6.012

150.7

1983

11.32

7.780

2.86

0.0337

8.145

101.1

1984

9.11

7.823

2.49

0.0312

7.668

115.4

1985

11.27

7.811

3.18

0.0390

8.580

112.7

1986

11.48

7.795

4.01

0.0488

9.534

110.3

1987

14.52

7.760

4.91

0.0637

11.009

100.5

1988

14.17

7.808

4.42

0.0626

10.507

100.6

Note:

* The effective exchange rate index is derived from a weighted average of nominal exchange rates of the Hong Kong dollar against the

currencies of 15 principal trading partners.