At the end of January, the Exchange Fund's total assets stood at $1.073 trillion - $11.1 billion higher than at the end of December 2004.

Foreign-currency assets rose by $14.6 billion while Hong Kong-dollar assets fell by $3.5 billion.

The increase in foreign currency assets was mainly due to increases in Certificates of Indebtedness, Government-issued currency notes, repurchase agreements outstanding and income from foreign currency assets.

The decrease in Hong Kong dollar assets was mainly due to a decrease in bank borrowings and valuation losses in the market value of Hong Kong equities held by the Exchange Fund, which were partly offset by placements received from fiscal reserves.

Monetary base, backing assets swelling

The Currency Board Account shows the Monetary Base at the end of January was $305.8 billion, an increase of $10.9 billion, or 3.7%, from the end of December 2004. 

The rise was mainly due to increases in Certificates of Indebtedness and in Government-issued currency notes, which were partly offset by a decrease in the market value of Exchange Fund Bills and Notes outstanding. The former reflected the seasonal demand for banknotes ahead of the Lunar New Year.

The backing assets increased by $12.9 billion, or 3.9%, to $340.2 billion. The rise was mainly attributable to the corresponding increases in Certificates of Indebtedness and in Government-issued currency notes in the monetary base together with income from investments and revaluation gains.