Exchange Fund total assets up by $4.2bln

July total deposits rose 1.8%, with 1.1% and 2.5% rise in HK dollar and foreign-currency deposits.

The total assets of the Exchange Fund amounted to $2.2321 trillion at the end of July, $4.2 billion higher than that of June, the Monetary Authority said on Tuesday.

Foreign currency assets fell by $1.3 billion while Hong Kong dollar assets grew by $5.5 billion, according to a government report.

The decline in foreign currency assets was mainly due to a decrease in unsettled purchases of securities, which was partly offset by valuation gains on foreign currency investments.

The rise in Hong Kong dollar assets was mainly due to valuation gains on Hong Kong equities.

The Currency Board Account showed the Monetary Base at the end of July was $1.0249 trillion, up $1.3 billion, or 0.1% on the end of June. The rise was mainly due to increases in Certificates of Indebtedness and market value of Exchange Fund Bills and Notes outstanding.

The Backing Assets dropped $1.4 billion, or 0.1%, to $1.1062 trillion, mainly attributable to exchange losses triggered by a stronger Hong Kong dollar which was partly offset by interest from investments and the issuance of Certificates of Indebtedness.

The backing ratio decreased from 108.2% at the end of June to 107.93% at the end of July.

Meanwhile, total deposits rose 1.8% in July, with a 1.1% and 2.5% rise in Hong Kong-dollar and foreign-currency deposits, the Monetary Authority says.

Accounting for 3.9% of foreign-currency deposits, renminbi deposits grew 15.6% to RMB103.7 billion, reflecting the expanding scope of the renminbi banking business in Hong Kong.

Total loans and advances rose 1.9% in July. Loans for use in Hong Kong grew by 1.8% and loans for use outside Hong Kong rose 2%. As Hong Kong-dollar loans increased at a slower rate than deposits, the Hong Kong-dollar loan-to-deposit ratio dropped to 77.3% at the end of July from 77.7% at the end of June.

Seasonally adjusted Hong Kong-dollar M1 grew 3.8% in July and rose 12.5% year on year. Unadjusted Hong Kong-dollar M3 increased by 1.2% during the month and expanded by 4.3% on a year earlier.