HKMA again acts to prop up local dollar
The Hong Kong Monetary Authority bought HK$1.56 billion worth of Hong Kong dollars yesterday as the local currency weakened below the parity rate of $7.80 against the US unit.
The US dollar strength was boosted by investors' arbitrage buying in the greenback after comments from Federal Reserve chairman Alan Greenspan indicating the United States economy would maintain solid growth and it would be prepared for 'a more dynamic adjustment of interest rates'.
More investors were now expecting the US Fed would raise rates at each of the four Federal Open Market Committee meetings this year, said market observers.
Yesterday's purchase was the third time the HKMA acquired Hong Kong dollar this month. A previous purchase was made on Wednesday amounting to HK$5.85 billion.
The Hong Kong dollar spot held at HK$7.80 against the US dollar after trading in a range of $7.7995 to $7.801, according to data from Bloomberg.
The US dollar also strengthened against both Japanese yen and the euro yesterday. The US dollar rose to $1.2185 against euro from $1.2185 on Thursday. Against the yen, the greenback was quoted at 110.19 yen late yesterday, the highest since mid June.
As a result of the purchase, the aggregate balance would fall to HK$24.3 billion.
