HONGKONG banks have been asked to monitor the movement of mainland funds and report any unusual trends to the Monetary Authority. The request comes from the chief executive of the Hongkong Monetary Authority, Joseph Yam Chi-kwong, and follows rumours that a capital flight from the mainland has begun in the light of the China's 16-point austerity plan to try and control its overheated economy. Mr Yam said yesterday: ''If there is something happening outside Hongkong that may have an impact on us, then it is in our best interest to find out more. ''So far, we have not seen anything significant with China.'' During the week, the Hongkong-US dollar exchange rate moved up from 7.3 to almost 7.8, but quickly settled back to around 7.6, meaning the territory's unit is still on the strong side of its link to the greenback. Mr Yam said the move in the exchange rate was caused by a rumour that Chinese firms had been ordered to repatriate funds. ''Only a small amount of money moved,'' he added. He said that, at the end of March, mainland money in Hongkong was estimated to be $39 billion. One leading banker said yesterday that mainland interests were moving their money from Hongkong banks to foreign-based financial institutions to keep it out of reach of mainland authorities. ''One customer moved US$30 million to a Swiss bank and didn't even ask for the interest rate,'' he said. Mr Yam agreed that it was possible some mainland customers might be moving money to foreign banks in a bid to ''make it safer'', but said he had no evidence of it. Hongkong Bank economist James Wong said: ''We have not detected any significant movement of money out of China. ''Obviously, there was some movement early on in the week as the full impact of China's economic reforms became clear. ''The Monetary Authority, I believe, is in a much better position to know what is happening and obviously wants to be well briefed and kept up to date, particularly, with Hongkong's monetary position regarding Chinese enterprises with investments in the territory.'' Mr Wong said that, if there was a significant flight of mainland capital, it would be reflected in the Hongkong dollar exchange rate, assuming it was converted for example into US dollars or other foreign currencies. Hongkong Chamber of Commerce chief economist Ian Perkin said there had been some fluctuation in currency movements, but no enormous buying of US currency. ''The reason the Hongkong dollar is so popular in China is, because of the peg, it is a de facto US dollar. The point is, if the Hongkong dollar was free to float, no one would bother with it in China. ''If there was a significant flight of Chinese capital out of Hongkong, we would see it reflected in the stock market and local property market,'' he said. ''True, the so-called red chips dropped more than 30 per cent on Monday, but mainland investors don't have their money in these stocks. They tend to go for second-liners and the top-30 Hang Seng stocks.'' A source with the Bank of Japan said: ''There has not been a rush to buy yen or US dollars, as far as I can tell.'' ''The stock market isn't moving at the moment because money is not flowing in, either locally or from overseas. But, at the same time, no one is bailing out either.''