Hong Kong's de facto central bank intervenes as Hong Kong dollar hits weak end of trading range
HONG KONG/SHANGHAI: Hong Kong's de facto central bank said on Thursday it sold 1.2 billion U.S. dollars against the Hong Kong dollar, which hit the weak end of its trading band.
The city's currency is pegged in a narrow range of 7.75-7.85 to the greenback, and the Hong Kong Monetary Authority (HKMA) intervenes at both ends to underpin the peg.
HKMA's intervention comes after the Hong Kong dollar hit the weak side of the band for the first time in two years last Friday.
The aggregate balance, the key gauge of cash in the banking system, will shrink by HK$9.42 billion on Friday, HKMA said in a statement.
If the Hong Kong dollar remains weak and triggers additional intervention by HKMA, local currency liquidity is likely to shrink further.
The Hong Kong dollar experienced sharp swings over May and June, as foreign and Chinese capital flocked to blockbuster share offerings or to pick up undervalued stocks in the Asian financial hub.
The resulting strength in the currency triggered by these inflows had pressured the HKMA to sell Hong Kong dollars to protect the peg, flooding the banking system with cash and driving the local interest rates sharply lower.
The plunging domestic interbank rates spurred speculative positions that used Hong Kong dollar borrowings to bet on other markets.
Last week, HKMA said the outlook for the direction of the Hong Kong dollar and for interbank rates remains uncertain due to carry trades and other factors. - Reuters
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
2 hours ago
- The Star
Turkey backs NATO's 5% defence spending goal, plans nationwide air shield, source says
ANKARA (Reuters) -Turkey supports NATO's decision to more than double its defence spending target to 5% of GDP by 2035 and is already exceeding the previous 2% benchmark, a Turkish defence ministry source said on Thursday. NATO allies on Wednesday agreed to raise their collective spending goal to 5% of gross domestic product over the next decade, citing the long-term threat posed by Russia and the need to strengthen civil and military resilience. 'Turkey is above the 2% target criterion under the Defence Spending Pledge,' the source said. 'As NATO's second-largest army, Turkey is among the top five contributors to the alliance's operations and missions.' The source said Turkey had fulfilled all its NATO capability targets and was continuing to invest in defence industry development and research. It plans to expand a layered air defence network across the country, centred around its national "Steel Dome" project. 'We are investing in air defence systems, hypersonic, ballistic and cruise missile capabilities, unmanned land, sea and air systems, as well as next-generation aircraft carriers, frigates, and tanks,' the source said. The new NATO target includes at least 3.5% of GDP for core defence spending, with the remainder to be spent on security-related infrastructure to improve civil preparedness and resilience. (Reporting by Tuvan Gumrukcu; Writing by Ece Toksabay; Editing by Daren Butler and Alison Williams)
The Star
2 hours ago
- The Star
Fintech firm Pine Labs files for India IPO
FILE PHOTO: A worker uses a Pine Labs machine for a transaction at a fuel station in Ahmedabad, India, August 5, 2022. REUTERS/Amit Dave/File Photo (Reuters) -Indian fintech firm Pine Labs has filed for an initial public offering, draft papers showed on Thursday, with the company set to issue fresh shares worth 26 billion rupees ($304 million). Pine Labs offers full stack payment solutions including point-of-sale machines to merchants for card payments and competes with Paytm and Walmart's PhonePe. Existing backers, which include Peak XV, Paypal and Mastercard, are selling up to 147.8 million shares in the IPO. Proceeds from the fresh shares issued will be used for investing in overseas units to expand the firm's presence beyond India, develop technology and pare down borrowings, draft papers showed. Morgan Stanley, Citi and Jefferies are among the book running lead managers of the offering. ($1 = 85.6150 Indian rupees) (Reporting by Hritam Mukherjee in Bengaluru; Editing by Sonia Cheema and Mrigank Dhaniwala)
New Straits Times
2 hours ago
- New Straits Times
Asian FX firm on softer dollar; regional, trade headwinds back in focus
SINGAPORE/HONG KONG: Asian currencies advanced on Thursday as the dollar weakened amid worries over the US Federal Reserve's independence, while investors turned their attention from easing Middle East tensions to regional and trade risks. Stocks in the region traded mixed, with South Korean shares sliding more than 2 per cent as investors locked in profits following a strong post-election rally. On the other end, equities in Thailand were up 0.4 per cent, while those in Malaysia advanced by 0.3 per cent. Investors are now shifting their focus from geopolitical risks in the Middle East, which kept markets on edge much of this week and last, to rising trade tensions as the July 9 deadline for the 90-day pause on reciprocal tariffs approaches. The key downside risk lies in the short timeframe before reciprocal tariff suspensions expire, with uncertainty over their extension, which could introduce volatility and reverse current sentiment quickly, RHB analysts wrote. Globally, concerns over the Federal Reserve's independence dented confidence in US monetary policy and sent the US dollar lower, after a media report said President Donald Trump had considered replacing Fed Chair Jerome Powell by September or October. The weakness in the dollar gave Asian currencies a lift, with the Thai baht inching up 0.5 per cent, a day after the Bank of Thailand (BoT) kept its interest rates unchanged. Alan Lau, an FX strategist at Maybank, said the BoT's dovish tone and a softer dollar are keeping rate cut hopes alive, supporting Thai bonds and paving the way for baht strength through the year. Thailand, already grappling with weak consumption, mounting household debt and a tourism slowdown, now also faces escalating political uncertainty and the risk of steep US tariffs on its exports if a deal is not struck before a July deadline. Most central banks in the region have taken a wait-and-see approach during their recent meetings, quoting the fundamentals of their respective economies and taking stock of uncertainty in global trade and geopolitics. Taiwan's central bank recently held its interest rates steady, citing solid growth in its tech-driven economy and muted inflation, while its Indonesian counterpart said it would intervene when required. The Taiwanese dollar rose 0.9 per cent to reach its highest level in over 3 years, while the Indonesian rupiah added 0.5 per cent. Meanwhile, the Philippines central bank left the door open for at least one more cut this year following a recent 25-basis-point rate cut. In Hong Kong, the local dollar held steady after the de facto central bank sold US$1.2 billion to defend the local currency peg, which keeps the Hong Kong dollar trading within a 7.75-7.85 range against the US dollar. Stocks were down 0.7 per cent. Corporate 2 hours ago Asian currencies rise as Fed credibility concerns knock US dollar lower Corporate Jun 25, 2025 @ 1:52am Asian stocks, FX climb as fragile Middle East truce lifts sentiment Economy Apr 21, 2025 @ 4:29am Dollar weakness, trade worries boost gold prices to record high Economy Jun 16, 2025 @ 10:41pm Gold recovers as Middle East tensions buoy demand; Fed meeting in focus
