The Exchange Fund's total assets climbed to $1.07 trillion in February, up $1.1 billion on January, the Monetary Authority says. Foreign currency assets fell $1.6 billion while Hong Kong dollar assets rose $2.7 billion.

The fall in foreign currency assets was mainly due to a decrease in Certificates of Indebtedness and sales of foreign currencies for Hong Kong dollars, which were partly offset by exchange gains on foreign currency investments and income from foreign currency assets.

The surge in Hong Kong dollar assets was mainly due to an increase in bank borrowings, the purchase of Hong Kong dollars from foreign currencies and valuation gains in the market value of Hong Kong equities held by the Exchange Fund. These increases were partly offset by a decrease in the balance of the banking system and fiscal drawdowns.

The Monetary Base stood at $296.2 billion, down $9.6 billion, or 3.1% from January. The decrease was mainly due to falls in the Aggregate Balance, in Certificates of Indebtedness and in the market value of Exchange Fund Bills and Notes outstanding.

The Backing Assets also went down $8.6 billion, or 2.5%, to $331.6 billion. The shrink was mainly attributable to the corresponding decreases in the Aggregate Balance and in Certificates of Indebtedness in the Monetary Base together with revaluation losses on investments, which were partly offset by income from investments. Reflecting this, the backing ratio grew from 111.24% in January to 111.96% in February.