The Exchange Fund's total assets amounted to $1.06 trillion at the end of May, $2.2 billion more than at the end of April, the Hong Kong Monetary Authority announced today.

Foreign currency assets fell $2.6 billion while Hong Kong dollar assets rose $4.8 billion.

The decrease 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 an increase in repurchase agreements outstanding and income from foreign currency assets. 

The increase in Hong Kong dollar assets was mainly due to the purchase of Hong Kong dollars from foreign currencies, which was partly offset by a decrease in bank borrowings and fiscal drawdowns.

Monetary Base drops $6b, to $280.6b

The Currency Board Account shows the Monetary Base at the end of May was $280.6 billion, a fall of $6 billion, or 2.1%, from the end of April. The decrease was mainly due to decreases in the Aggregate Balance, Certificates of Indebtedness and market value of Exchange Fund Bills and Notes outstanding.

The Backing Assets fell $5.3 billion, or 1.7%, to $310.3 billion. The decrease was mainly attributable to the corresponding decreases in the Aggregate Balance and Certificates of Indebtedness in the Monetary Base.

Reflecting this, the backing ratio increased from 110.14% at the end of April to 110.6% at the end of May.