The Hong Kong Monetary Authority oversees Hong Kong’s monetary system. It was founded in 1993 when the Office of the Exchange Fund merged with the Office of the Commissioner of Banking. Its responsibilities include maintaining currency stability, monitoring Hong Kong’s banking system and managing the Exchange Fund.
HKMA steps in to market to defend Hong Kong dollar peg
The Hong Kong Monetary Authority (HKMA) said on Tuesday it had stepped into the market by selling HK$2.7 billion (US$348.38 million) as the currency repeatedly hit the top end of its trading range.
This is the fifth time in the past two weeks that the HKMA, the city’s de facto central bank, had stepped in as "hot money" continues to flow into the city.
The authority had to intervene significantly after the 2008 global financial crisis to manage an inflow of capital between October 2008 and the end of 2009 that the authority has estimated at HK$640 billion.
The latest intervention will lift the aggregate balance – the sum of balances on clearing accounts maintained by banks with the HKMA – to HK$165.72 billion on November 1.
The Hong Kong dollar is pegged at 7.8 to the dollar, but can trade between 7.75 and 7.85. Under the currency peg, the HKMA is obliged to intervene when the Hong Kong dollar hits 7.75 or 7.85 to keep the band intact.
The currency was trading at 7.7500 against the US dollar at 6.25pm.