The Exchange Fund's total assets amounted to $1.056 trillion at the end of March, a drop of $18 billion from February, the Monetary Authority says.

Foreign currency assets fell by $14 billion while Hong Kong dollar assets decreased by $4 billion.

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

The decrease in Hong Kong dollar assets was mainly due to a decrease in the balance of the banking system, valuation losses in the market value of Hong Kong equities held by the Exchange Fund and fiscal drawdowns.

These decreases were partly offset by an increase in bank borrowings and the purchase of Hong Kong dollars from foreign currencies.

The Monetary Base at the end of March was $286.5 billion, a decrease of $9.7 billion, or 3.3%, from the end of February. The decrease was mainly due to decreases in the Aggregate Balance and Certificates of Indebtedness. 

The Backing Assets decreased by $15.6 billion, or 4.7%, to $316 billion.

The decrease was mainly attributable to the transfer of assets out of the Backing Portfolio to the Investment Portfolio in accordance with the arrangement approved by the Exchange Fund Advisory Committee together with the decreases in the Aggregate Balance and Certificates of Indebtedness in the Monetary Base.