Hong Kong dollar stable despite Occupy Central unrest

For a gauge of how markets view Hong Kong's worst civil unrest since the 1960s, take a look at the local dollar, where volatility is a fraction of its levels during the global financial crisis.

While a measure of currency price swings jumped to 0.6 per cent, it failed to breach a high in March, when pro-democracy protests started to reach a head. The measure climbed to 1.6 per cent during the global financial meltdown in 2008, after peaking at 3.5 per cent at the end of the 1990s Asian crisis.

Tens of thousands of pro-democracy protesters have flooded Hong Kong's streets to demand free and open elections and the resignation of Chief Executive Leung Chun-ying.

Still, Hong Kong's dollar has strengthened versus all but two of its 31 most-traded peers this month, and is 1 per cent away from the lower end of its trading range of HK$7.75 to HK$7.85 per US dollar.

"It's just political noise," said Tim Condon, the Singapore- based head of Asia research at ING.. "If the protests die out, then volatility will decrease and the Hong Kong dollar will go back to HK$7.75."

The Hong Kong dollar weakened to HK$7.77 per US dollar on Monday in New York, the lowest since May 2012, before trading at HK$7.7693. The currency trades under a pegged exchange-rate system, with the Hong Kong Monetary Authority buying and selling greenbacks to maintain its level.