Monetary Authority sells Hong Kong dollar for third time in four days
For third time in four days, HKMA sells down currency, in part because of Japanese moving cash out of mainland amid tension over islands
The Monetary Authority again intervened in the currency markets yesterday to weaken the Hong Kong dollar, the third time in four days it has stepped in as "hot money" continues to flow into the city.
But some also think money is flowing from Japanese businesspeople who are shifting some mainland assets to Hong Kong as tensions have increased between Beijing and Tokyo over ownership of islands in the East China Sea known as the Diaoyus in China and the Senkakus in Japan.
Given that political tensions show little sign of easing, analysts think the funds will continue to flow in and the HKMA, the city's de facto central bank, will have to continue to intervene. The Hong Kong dollar is pegged to the US dollar and must trade within a range of HK$7.75 and HK$7.85 to the greenback.
The HKMA sells the Hong Kong dollar when the exchange rate appreciates to the upper limit of HK$7.75. Conversely, it buys the local unit to support it when it dips to the lower limit.
Yesterday, the authority said it intervened twice and sold a combined US$855 million worth of Hong Kong dollars at the upper end, or HK$6.63 billion.
"The HKMA will remain closely vigilant of the market developments" and maintain the exchange-rate stability, a spokesman for the authority said.
