HONG Kong's monetary systems can withstand the ''tidal wave'' of foreign cash pouring into the local stock market, according to the Secretary for Financial Services, Michael Cartland.
In an interview with the Sunday Morning Post, Mr Cartland admitted the Hong Kong-US dollar peg had been placed under ''some strain'' and that the monetary authority had to inject money into the system on a daily basis.
''When the peg strays too far from the 7.8 exchange rate figure the monetary authority generally steps in to correct the position,'' he said.
''Quite clearly, this flood of money from the United States placed a big demand on Hong Kong dollars, which in turn placed strong pressure on the peg.
''The monetary authority has had to put money into the system on a daily basis now for over a week to keep the peg in line.'' He said the authority had to inject $1 billion into the system on one day and lesser amounts on others.
''The $1 billion was the bullet,'' he said.
''But the most important thing from our point of view is that the exchange fund is soundly managed and can cope with the pressures placed upon it.