Foreign assets, representing the external assets of the Exchange Fund, amounted to $1.07 trillion at the end of December, down $6.5 billion on November, the Monetary Authority says.

Foreign currency assets grew $300 million while Hong Kong dollar assets fell $6.8 billion.

The authority said the rise in foreign currency assets was mainly due to a surge in Certificates of Indebtedness, valuation gains on foreign currency investments and income from foreign currency assets, which were partly offset by a fall in securities purchased but settled in the following month.

The fall in Hong Kong dollar assets was mainly due to a drop in bank borrowings, which was partly offset by placements received from fiscal reserves.

The monetary base was $284 billion, up $7.1 billion or 2.6% from the end of November. The increase was due mainly to rises in Certificates of Indebtedness and in the market value of Exchange Fund Bills and Notes outstanding. The former reflected the seasonal demand for banknotes around Christmas and New Year.

The backing assets went up $7.9 billion, or 2.6%, to $316.9 billion. The rise was attributable mainly to the corresponding increase in Certificates of Indebtedness in the monetary base, income from investments and revaluation gains. At the end of December, the backing ratio stood at 111.58%, compared with 111.61% at the end of November.