Date
22 October 2017
Hong Kong's de facto central bank steps in again to back the US dollar peg as the city's currency gains strength. Photo: Bloomberg
Hong Kong's de facto central bank steps in again to back the US dollar peg as the city's currency gains strength. Photo: Bloomberg

HKMA defends dollar peg 6 times in 9 days

The Hong Kong Monetary Authority injected another HK$1.94 billion (US$250 million) into the interbank market to defend the dollar peg Wednesday as the city’s currency continues to gain strength.

It was the sixth operation of its kind in nine days and brought the combined total to HK$18.21 billion, the Hong Kong Economic Journal reported Thursday.

The value of the Hong Kong currency has hovered around its strong end at 7.75 to the US dollar, prompting the de facto central bank to back the greenback by selling the Hong Kong dollar. The aggregated balance of the banking system will rise to HK$182.07 billion.

Analysts said the city’s currency has gained not as a result of money inflows but due to demand from local mergers and acquisitions, dividend payouts and continued low US dollar interest rates.

Analysts also warned of potential money outflows later this year as expectations of a US interest rate hike gather pace.

Chan Ka-keung, Secretary for Financial Services and the Treasury, earlier called for market players to be alert to external market volatility.

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