The Monetary Authority of Macao (AMCM) Monday announced its preliminary estimate of Macao's exchange reserves for February 2008, which stood at 108.9 billion patacas (13.6 billion U.S. dollars), a year-on-year increase of 41.7 percent.

Compared with January this year, the SAR's (Special Administrative Region) reserves grew by 2.6 percent in February, which also represented 23 times the currency in circulation in the same month, according to AMCM.

In a previous Monetary and Financial Stability Review, AMCM has forecast that in the near future, the pataca is likely to edge down in association with lower exchange rates of the anchor currency in 2008, since the greenback will continue to show weakening signs, especially against the euro and the RMB.

Macao adopts a linked exchange rate regime, under which the legal tender, pataca, is fixed to the Hong Kong dollar at a middle rate of one HK dollar to 1.03 pataca. Since the Hong Kong dollar is pegged to the greenback in a similar regime, the pataca is indirectly linked to the U.S. dollar.

"A weaker currency could raise imported inflation, while its positive effect on Macao's export competitiveness would depend on its stimulating impact on domestic costs," the AMCM review said.

According to the 2008 SAR Government Budget, Macao's fiscal balance would continue to register a surplus, on the basis of which the government was considering to establish a fiscal reserve system, in a bid to strengthen local fiscal discipline and help the SAR to weather any future economic downturn or challenge.

(Xinhua News Agency, April 1, 2008)