Hong Kong restrains local dollar's rise for second time in 3 days
The
Hong Kong Monetary Authority (HKMA) has stepped in for the second time within three days to maintain the local currency's peg to the US dollar after the Hong Kong dollar hit the strong end of its trading band.
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The city's de facto central bank sold HK$9.532 billion worth of the local currency and bought US$1.23 billion at HK$7.75 per US dollar on Monday, according to an HKMA statement.
It was the second such move within three days, following a
larger intervention during the New York session on May 2, when the HKMA bought US$6.005 billion at HK$7.75 and sold HK$46.539 billion worth of local currency.
The combined actions would increase the city's aggregate balance – a gauge of interbank liquidity – to HK$100.841 billion on May 7, more than double its previous level of HK$46.54 billion, the HKMA said.
The city's currency has been pegged to the US dollar since 1983. Under the current system, in place since 2005, the HKMA intervenes to maintain the currency within a narrow band of HK$7.75 to HK$7.85 per US dollar.
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The interventions came amid a wave of capital inflows, driven by increased investor interest in Hong Kong stocks and steady southbound buying from mainland Chinese investors via the Stock Connect mechanism.
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