HONG KONG MONETARY AUTHORITY Refinements to the Operation of the Linked Exchange Rate System 4 July 2005.

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Presentation transcript:

HONG KONG MONETARY AUTHORITY Refinements to the Operation of the Linked Exchange Rate System 4 July 2005

2 REVIEW OF MONETARY CONDITIONS (I)

3 REVIEW OF MONETARY CONDITIONS (II) Spot exchange rate

4 Aggregate Balance REVIEW OF MONETARY CONDITIONS (III)

5 REVIEW OF MONETARY CONDITIONS (IV)

6 THREE REFINEMENTS TO THE OPERATION OF THE LINKED EXCHANGE RATE SYSTEM (I) A strong-side Convertibility Undertaking by the HKMA to buy US dollars from licensed banks at 7.75

7 Shifting the weak-side Convertibility Undertaking by the HKMA to sell US dollar to licensed banks from 7.80 to 7.85 in a gradual manner (100 pips per week from 23 May 2005 to 20 June 2005) THREE REFINEMENTS TO THE OPERATION OF THE LINKED EXCHANGE RATE SYSTEM (II) /520/6

8 Introduction of a Convertibility Zone within which market operations may be conducted consistent with Currency Board principles THREE REFINEMENTS TO THE OPERATION OF THE LINKED EXCHANGE RATE SYSTEM (III) Convertibility Zone

9 THE LATEST MONETARY CONDITIONS