Hong Kong dollar international banking’s preferred currency

Nelson [email protected] International assets of local banks increased 3.5 per cent quarter-to-quarter to MOP1,167.7 billion (US$146.1 billion) but decreased 0.8 per cent year-on-year in the second quarter of the year, according to the most recent data from the Monetary Authority of Macao (AMCM). ‘The proportion of international business in the local banking sector rebounded slightly in the second quarter of 2016,’ notes the AMCM report. Of the total banking assets held in the SAR, the share of international assets increased 0.3 per cent quarter-to-quarter to 84.9 per cent. As part of international assets, external assets saw a 2.5 per cent decline year-on-year during the quarter, to MOP862.5 billion, while local assets in foreign currencies increased by 4.3 per cent to MOP305.2 billion. Hong Kong Dollar leading The Hong Kong Dollar (HK$) was the most represented currency in international banking transactions, accounting for 42.4 per cent of total international assets, followed by the U.S. Dollar (US$), the Renminbi (RMB) and other foreign currencies, accounting for 41.2 per cent, 10 per cent and 5.5 per cent, respectively. The Macau Pataca (MOP) only accounted for 0.9 per cent and 1.7 per cent of the total international assets and total international liabilities, respectively, as at the end of the second quarter. External interbank loans between April and June dropped 3.5 per cent to MOP394.9 billion when compared with the same period last year. Liabilities In terms of total international liabilities Hong Kong’s currency was also the most represented, accounting for 49.6 per cent, with the U.S. Dollar, the Renminbi and other foreign currencies representing 49.6 per cent, 35.5 per cent, 9 per cent and 4.2 per cent, respectively. Total international liabilities as at end-June saw a 3.8 per cent quarter-to-quarter increase to MOP1,106.5 billion, however, suffering a year-on-year decrease of 2 per cent. Of this amount, external liabilities decreased 5.9 per cent to MOP606.8 billion, while local liabilities in foreign currencies managed to grow by 3.2 per cent to MOP499.7 billion Foreign currency deposits held by local residents and the Macau Government in local banks made up a major part of international liabilities, with these deposits seeing a 0.3 per cent year-on-year drop to MOP445.6 billion at the end of the second quarter, as compared to MOP446.7 billion from the same period last year. Breaking it down In terms of region, claims on Hong Kong and Mainland China accounted for 37.7 per cent and 22.5 per cent of total external assets, respectively, as at the end of June this year, followed by the U.S. with an 8 per cent share. Claims on Portugal and the United Kingdom accounted for 2.8 per cent and 2.2 per cent, respectively. Further external liabilities for Hong Kong and Mainland China accounted for 52.5 per cent and 18.1 per cent of the total, again followed by the United States, at 3 per cent. France and Portugal took up respective shares of 1.0 per cent and 0.8 per cent of external liabilities, respectively. Portuguese-speaking countries represented 3.0 per cent and 1.1 per cent of total external assets and liabilities.