The Monetary Authority pumped HK$1.937 billion into the city's banking system late on Friday - the fifth injection in a week - in a bid to peg back a rise in the Hong Kong dollar and keep it within official trading limits against the US dollar.
Funds had poured into the interbank market in New York trading as Hong Kong's currency hit 7.75 to the US dollar, the upper limit of its trading range.
An HKMA spokesman said the strengthening Hong Kong dollar reflected the continued demand for the currency amid tight liquidity within the banking system and the de-leveraging of previously long US dollar positions on risk reduction.
The 11th such injection since the collapse of Lehman Brothers in September will bring the aggregate balance to HK$41.06 billion. The authority injected a total of HK$11.61 billion into the banking system last week.
Despite the capital injections, the Hong Kong dollar has remained firm in recent weeks because of the unwinding of carry trades in the wake of the global financial crisis. Investors could previously earn a profit on the difference between US and Hong Kong dollar interest rates by selling Hong Kong dollars for US dollars.
Analysts said the Hong Kong dollar exchange rate would ultimately depend on the global crisis.
