HKMA to issue HK$21 bln extra Exchange Fund bills in January

HONG KONG Mon Jan 7, 2013 4:44am EST

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HONG KONG Jan 7 (Reuters) - The Hong Kong Monetary Authority (HKMA) will issue an additional HK$21 billion ($2.71 billion) in Exchange Fund bills in January to help banks manage liquidity.

Three-month Exchange Fund bills to be tendered on Jan. 15, 22 and 29 will be increased to HK$15 billion, the HKMA said on Monday.

Six-month bills will be expanded by HK$6 billion, it said.

Interbank liquidity is expected to remain abundant after the issuance of additional Exchange Fund bills, which is not expected to have a significant impact on liquidity conditions and interest rates, the city's de facto central bank added.

Ample liquidity was boosted by money market injections by the HKMA in the past few months to rein in the Hong Kong dollar as capital inflows pushed the currency to the strong end of its trading band with the U.S. dollar.

The cumulative amount of Hong Kong dollars injected into the market since Oct. 20, 2012, is $13.831 billion.

The issuance of additional bills in the coming weeks will reduce the aggregate balance by about HK$7 billion on each of the following days: Jan. 16, 23 and 30.

($1 = 7.7506 Hong Kong dollars) (Reporting by Michelle Chen; Editing by Jacqueline Wong)

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