At the end of February, the Exchange Fund's total assets stood at $1.08 trillion - $8.1 billion higher than at the end of January.

Foreign-currency assets rose $14.5 billion while Hong Kong-dollar assets fell $6.4 billion.

The increase in foreign-currency assets was mainly due to valuation gains on foreign-currency investments, income from foreign-currency assets and an increase in securities purchased but settled in the following month.

These increases were partly offset by a decrease in Certificates of Indebtedness. 

The decrease in Hong Kong-dollar assets was mainly due to fiscal drawdowns and a decrease in bank borrowings which were partly offset by valuation gains in the market value of Hong Kong equities held by the Exchange Fund.

Monetary Base, Backing Assets shrink slightly

The Currency Board Account shows that the Monetary Base at the end of February 2004 was $323.1 billion, a decrease of $6.9 billion, or 2.1%, from the end of January 2004. 

The decrease was mainly due to a decrease in Certificates of Indebtedness of $7.4 billion as the seasonal demand for cash unwound after the Lunar New Year.

The Backing Assets decreased by $6.3 billion, or 1.7%, to $353.9 billion. The decrease was mainly driven by the corresponding decrease in Certificates of Indebtedness, which was partly offset by income from investments and revaluation gains.