The Hong Kong Monetary Authority will auction a further HK$20.4 billion in Exchange Fund bills to satisfy demand as lenders choose to invest in safe-haven government debts amid the financial crisis. The additional supply of Exchange Fund bills, a special form of debt, was meant to meet strong demand from banks for liquidity management due to continuing credit and liquidity concerns, the de facto central bank said. 'Strong demand is reflected in the very low yield of short-dated Exchange Fund paper,' the HKMA said yesterday. Starting next week, the HKMA will expand a regular issue of three-month paper by HK$14 billion and a separate issue of six-month paper by HK$3.4 billion. In addition, an issue of six-month paper will be expanded by HK$3 billion. The issue will be rolled over upon maturity. Frances Cheung, a fixed-income strategist with Standard Chartered Bank, said the HKMA issued additional paper because of the huge aggregate balance. 'By mopping up excess liquidity, it could create buffer for future capital injection if necessary,' she said. The HKMA has been pumping money into the banking system since the collapse of Lehman Brothers in September last year to help local banks seeking liquidity. The aggregate balance, a measure of liquidity in the banking system, stood at a near-record high of HK$157.45 billion yesterday. It will fall by HK$7.7 billion on February 11, HK$7 billion on February 18 and a further HK$5.7 billion on February 25 as a result of the issuance of additional bills. The HKMA said it did not expect the additional bills to have a significant impact on liquidity conditions and interest rates.