Hong Kong’s dollar weakens below low end of trading band as capital flight from China’s stocks gathers pace in escalating trade war
- The Hong Kong dollar touched 7.85000 per US dollar in New York trading
- The monetary authority did not immediately disclose any intervention in the market to prop up the local currency
The local currency touched 7.85000 per US dollar in New York, the weak end of a HK$7.7500 – HK$7.8500 trading band against the US dollar, which was introduced in 2005. It is not clear if it was traded at that level.
Under the Linked Exchange Rate System, the Hong Kong Monetary Authority (HKMA) is obliged to buy or sell US dollars to keep the local currency within the trading band. The HKMA did not immediately disclose any intervention in the market.
Equity markets have been falling in China and Hong Kong last week, with the Shanghai market posting its fourth straight week of losses on Friday with a 1.9 per cent decline. Hong Kong’s stock market had its second consecutive week of declines.
Meanwhile, overseas investors have been leaving China’s stock market after negotiations to end the year-long US-China trade war ended in impasse, while a set of US tariffs on Chinese exports kicked in on schedule.
As much as 36.4 billion yuan (US$5.25 billion) in equities had been sold so far in May, more than the total net sales of 22 billion yuan in April, according to Bloomberg’s data.