The Exchange Fund's total assets stood at $1.242 trillion in May, down $11.2 billion on April, the Monetary Authority says.

The month saw foreign currency assets fall $12.3 billion while Hong Kong dollar assets rose $1.1 billion.

The drop in foreign currency assets was due mainly to valuation losses on foreign currency investments, redemption of Certificates of Indebtedness and a decrease in securities purchased but settled in the following month. The falls were partly offset by interest and dividend income from foreign currency assets.

The rise in Hong Kong dollar assets was due mainly to valuation gains of Hong Kong equities held by the Exchange Fund and placements received from fiscal reserves, which were partly offset by a drop in Exchange Fund Bills and Notes issued but not yet settled.

The Monetary Base fell 1.1% to $294.8 billion. The fall was due mainly to a decrease in Certificates of Indebtedness.

Backing Assets fell 1.4% to $328 billion. The drop was attributable mainly to the redemption of Certificates of Indebtedness in the Monetary Base and revaluation losses, which were partly offset by interest from investments. Reflecting this the backing ratio fell from 111.53% to 111.26%.