The following is the unedited transcript of the news release from Hong Kong Monetary Authority

Exchange Fund Abridged Balance Sheet and Currency Board Account

The Hong Kong Monetary Authority (HKMA) announced today that the total assets of the Exchange Fund amounted to HK$1,451.1 billion on 31 January 2008.

The figure is included in the Exchange Fund Abridged Balance Sheet, which is released monthly together with the Currency Board Account.

At the end of January 2008 the total assets of the Exchange Fund, at HK$1,451.1 billion, were HK$34.1 billion higher than at the end of December 2007. Foreign currency assets increased by HK$63.8 billion while Hong Kong dollar assets decreased by HK$29.7 billion.

The rise in foreign currency assets was due mainly to valuation gains on foreign currency investments, interest and dividend income from foreign currency assets, purchases of foreign currencies with Hong Kong dollars, and increases in Certificates of Indebtedness and repurchase agreements outstanding.

The decline in Hong Kong dollar assets was due mainly to the sale of Hong Kong dollars for foreign currencies, and valuation losses on Hong Kong equities held by the Exchange Fund, which were partly offset by placements received from fiscal reserves.

The Currency Board Account shows that the Monetary Base at the end of January 2008 was HK$338.4 billion, an increase of HK$18.1 billion, or 5.7%, from the end of December 2007. The rise was due mainly to increases in market value of Exchange Fund Bills and Notes outstanding and Certificates of Indebtedness, the latter reflecting the seasonal demand for banknotes around the Lunar New Year. The tap issue of HK$6.0 billion of Exchange Fund Bills during the month reflected a shift of funds from the Aggregate Balance to the Exchange Fund paper by about the same amount.

The Backing Assets increased by HK$12.4 billion, or 3.5%, to HK$369.8 billion. The increase was attributable mainly to the issuance of Certificates of Indebtedness in the Monetary Base, revaluation gains and interest from investments. These increases were partly offset by 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. Reflecting this, the backing ratio declined from 111.60% at the end of December 2007 to 109.30% at the end of January 2008.

Available at:

http://www.info.gov.hk/hkma/eng/press/index.htm