Use of fiscal reserves hides city's currency defense

Article Abstract:

The de facto central bank of Hong Kong started to utilize funds raised from levies and taxes, or government fiscal reserves, to safeguard the position of the Hong Kong dollar amidst the currency crisis in Souther Asia. The move was believed to be an effort that helped hide a perceived capital outflow from Hong Kong for a short period of time. Hong Kong's monetary authority can aggressively intervene in the currency markets without the need for disclosure due to the less-stringent disclosure requirements for fiscal reserves.

Administration of General Economic Programs, Currency Stabilization Programs, Management, Monetary policy, Currency devaluation, Devaluation (Currency), Currency stabilization

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Hammering confidence, Hang Seng Index plummets

Article Abstract:

The Hang Seng Index of Hong Kong plummeted as investors lost confidence and fled from the stock market due to sky-high interest rates brought forth by the country's defense of its currency's position against the US dollar. Dour analysts, retail investors and fund managers were left as a result of the Hang Seng Index's decline. The development marks the demise of a stock market that is believed to be Asia's last safe haven for investors.

Interest Rates, Stock price indexes

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