The monetary authority intervenes again to help prop up the sagging greenback at a cost of US$200 million Another upward spike in the Hong Kong dollar prompted Hong Kong's de facto central bank to step into the market three times over a 24-hour period, buying a total of US$200 million worth of greenbacks. The first injection to support the sagging US dollar came late on Monday in London trading after a large sell order of US dollars against the Hong Kong dollar saw no takers, according to traders. This was followed by the purchase of a further US$100 million, split into two trades, at mid-morning yesterday. The initial intervention had little immediate effect on the local currency, which for the past seven weeks has traded at levels significantly stronger than the HK$7.80 at which it is supposedly pegged to the US dollar. It continued to hover slightly above $7.74 to the US dollar in early Hong Kong trading. But after the mid-morning injection it gradually weakened and by late yesterday was quoted at HK$7.7634, up from $7.7437 late on Monday. 'The fact that it added liquidity twice basically signals that the HKMA [Hong Kong Monetary Authority] wants [the Hong Kong dollar] to go back towards HK$7.80 and shows that it is very determined,' said Pieter van der Schaft, the regional chief economist with Barclays Capital. One-year Hong Kong dollar forwards, which had been slipping into a deeper discount since Friday, saw a slight pull back to 325 to 310 pips after the interventions. The one-month Hong Kong interbank offered rate fell further to 0.093 per cent yesterday from 0.125 per cent on Monday, however, as the amount of liquidity in the market exceeded HK$5 billion, the largest it has been for almost four years. Market participants said funds were still flowing into Hong Kong, even though the stock market had been consolidating for the past week. Part of the reason was the stream of high-profile Chinese-linked initial public offerings, which continued to attract large amounts of capital from overseas, said Owen Mak, a foreign exchange dealer at Delta Asia Financial Group. Another reason was the increasing number of tourists arriving from the mainland as a result of a relaxation in travelling restrictions by the Chinese government, said Cecil Leung, the head of interest rate and derivatives trading at Credit Lyonnais. 'The biggest daily inflow comes with the visitors from the mainland,' he said. Mr Leung noted that since this was coinciding with a recovery in the local economy and a continued weakening of the US dollar against Asian currencies in general, there was a natural flow into the HK dollar. The initial sharp rally in the dollar to a six-year high of HK$7.705 on September 22 came as Group of Seven leaders called for more flexibility in exchange-rate regimes, sparking a wave of stop-loss selling of the US dollar. Since then, the HKMA has bought about US$685 million. The last time it was in the market was on October 14. Since then, the Hong Kong dollar has hovered in a range between $7.75 and $7.77 with a weakening bias. In a brief statement yesterday, the HKMA reiterated that the government remained committed to maintaining currency stability under the linked exchange-rate system. 'The HKMA has been monitoring the situation closely and we will inject liquidity as and when appropriate in order to dampen market volatility,' a spokesman said.