Systemic risk answers sought as HKMA intervenes on currency
Hong Kong Monetary Authority bought US$2.099 billion within the past 24 hours at HK$7.75 a dollar, the upper limit of a convertibility range that triggers intervention.
Lawmakers are demanding answers from the government on measures to bolster the city’s financial system stability as it emerged that authorities had been forced to intervene in currency markets for the first time in 18 months to defend the peg to the US dollar.
The Hong Kong Monetary Authority (HKMA) said it bought US$2.099 billion within the past 24 hours at HK$7.75 a dollar, the upper limit of a convertibility range that triggers intervention.
News of the HKMA’s actions came ahead of an expected statement from Secretary for Financial Services and the Treasury, Chan Ka-keung, about the health of the city’s financial system in response to a written question on the subject from legislator Ng Leung-sing.
Ng’s question follows up on an International Monetary Fund (IMF) report in May which highlighted growing exposure of the city’s financial system to potential shocks from the mainland and the risk of fallout from an anticipated tightening of US monetary policy.
Ng wants to know if authorities have carried out an assessment of risks highlighted by the IMF, what measures are in place to ensure the resilience of the financial system and whether any new policy actions to external risks are being planned.
The exposure of Hong Kong’s banks to mainland companies has soared since the middle of last year, when a tightening of onshore liquidity saw many mainland firms looking offshore for funding.