The Exchange Fund's total assets amounted to $1.06 trillion at the end ofJuly, $600 million higher than a month earlier, the Monetary Authority says.

Foreign currency assets dropped $3 billion while Hong Kong dollar assets grew $3.6 billion.

The fall in foreign currency assets was due mainly to falls in Certificates of Indebtedness and repurchase agreements outstanding. The rise in Hong Kong dollar assets was due mainly to a surge in bank borrowings and valuation gains in the market value of Hong Kong equities held by the Exchange Fund, which was partly offset by fiscal drawdowns.

Backing ratio rises

The monetary base fell by $2.1 billion, or 0.7%, to $279.3 billion at the end of July. The fall was due mainly to a dip in certificates of indebtedness.

Backing assets dropped $1.6 billion, or 0.5%, to $309.7 billion. The fall was attributable mainly to the corresponding fall in certificates of indebtedness in the monetary base and revaluation losses on investments, which was partly offset by income from investments. Reflecting this, the backing ratio rose from 110.62% at the end of June to 110.88%.