HKMA intervenes in the market for the fifth time in 2 weeks to defend currency peg
HKMA intervenes to drive away carry traders who have sought to take advantage of the city’s rate gap with the US dollar
The city’s de facto central bank sold US$1.69 billion during New York trading hours on Thursday and bought the equivalent of HK$13.28 billion at HK$7.85 per US dollar, the authority said in a statement on Friday morning.
The moves would reduce the aggregate balance – a measure of the banking sector’s liquidity – by the same amount to HK$101.22 billion on Monday when the transactions would be settled, it added. The local currency traded at HK$7.8497 after the intervention.
The move was the fifth time that the HKMA intervened in the market to defend the peg, buying HK$72.35 billion and selling US$9.22 billion since June 26.
Hong Kong pegged its dollar to the US currency in 1983 at HK$7.80 per US dollar. In 2005, the HKMA allowed its value to fluctuate between HK$7.75 and HK$7.85 and the authority was obliged to intervene to keep the currency in that range.