Date
17 August 2017
The Hong Kong dollar traded close to the upper limit of a narrow band against the greenback Tuesday, prompting the HKMA to intervene. Photo: AFP
The Hong Kong dollar traded close to the upper limit of a narrow band against the greenback Tuesday, prompting the HKMA to intervene. Photo: AFP

Hong Kong central bank steps in to defend dollar peg

The Hong Kong Monetary Authority (HKMA) injected HK$12.65 billion (U$1.63 billion) into the interbank market for the first time since 2012 to stop the Hong Kong currency from rising against the US dollar.

The HKMA stepped in four times Tuesday as the Hong Kong dollar traded at HK$7.75 against the greenback, close to the upper limit of a narrow range.

The transactions are expected to swell the aggregate balance in the interbank market to HK$176.5 billion by Thursday.

Demand for the Hong Kong dollar has been growing in the past few days amid an array of initial public offerings, mergers and acquisitions and dividend payment, market observers were quoted as saying. They expect more such injections in the coming days.

The monetary authority will keep a close eye on market changes and business activities and continue to maintain the stability of the currency, the report said, citing a spokesperson.

However, the increase in the aggregate balance is unlikely to affect interbank offered rates for domestic lenders as short-term interest rates are already low, the spokesperson said.

Listed companies are expected to distribute US$11 billion worth of dividends in the next two months.

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VW/AC/RA

Freelance journalist

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