RMB reserves have recently been increasing rapidly in Hong Kong. However, this does not significantly affect the Hong Kong(HK) Dollar, according to documents submitted by the Hong Kong Monetary Authority (HKMA) to its Legislative Council on April 22, 2008.
This year, Hong Kong's RMB reserves have increased by 7 billion yuan (US$1 billion) in January and 7.4 billion yuan (US$1.06 billion) in February. And Hong Kong's total RMB reserves have reached 47.8 billion yuan.
Faster RMB appreciation, global monetary market fluctuation, a decrease in the Hong Kong Dollar's deposit rate along with the US Dollar's, are the three factors which drive the rapid increase of RMB reserves, according to HKMA.
At present, the flexible maturity deposit rate of the HK Dollar is just 0.01 percent; while that number was 2.25 percent in September 2007.
HKMA said that although Hong Kong's RMB demand is increasing; it has little influence on the HK Dollar and the Chinese mainland's currency supply. RMB reserves make up 0.8 per cent of Hong Kong's total reserves. Moreover, Hong Kong's RMB reserves have been transferred to the Shenzhen branch of People's Bank and do not affect the Chinese mainland’s currency supply.
By People's Daily Online
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