HKMA to issue HK$34.7 bln in extra Exchange Fund bills

HONG KONG, Nov 3 - The Hong Kong Monetary Authority (HKMA) on Tuesday said it would issue additional Exchange Fund bills this month totalling HK$34.7 billion (US$4.5 billion) to meet higher demand from banks for liquidity management.

Three-month Exchange Fund bills to be tendered on Nov. 10, Nov. 17 and Nov. 24 would be increased by HK$16 billion in total, the HKMA said.

Six-month bills to be offered on Nov. 17 would be expanded by HK$6 billion, and the 12-month bills to be tendered on Nov. 10 would be increased by HK$3.7 billion, it said.

In addition, a new issue of six-month bills worth HK$9 billion would be offered on Nov. 24 and the issue would be rolled over upon maturity, the HKMA added.

Interbank liquidity was likely to remain abundant after the issuance of additional Exchange Fund bills, which should not have a significant impact on liquidity conditions and interest rates, the HKMA said.

Liquidity has been boosted by money market injections by the HKMA over recent months to rein in the Hong Kong dollar <HKD=> as strong capital inflows into the territory pushed the currency to the top of its trading band with the U.S. dollar.

On Tuesday, the aggregate balance -- the sum of balances on clearing accounts maintained by banks with the HKMA -- stood at HK$248.39 billion.

The issue of additional bills in coming weeks would reduce the aggregate balance by about HK$8.7 billion on Nov. 11; by another HK$12 billion on Nov. 18; and by a further HK$14 billion on Nov. 25, the HKMA said. ($1=HK$7.8)