Hong Kong’s bill for defending city’s currency since April stands at HK$52.9 billion
The city’s de facto central bank has bought a total of about HK$52.9 billion since April to support the local dollar
The Hong Kong Monetary Authority, the city’s de facto central bank, intervened in the foreign currency market to defend the Hong Kong dollar on Tuesday, bringing its total purchases of its own currency since April to about HK$52.9 billion (US$6.7 billion).
It bought HK$1.57 billion of the currency during New York trading hours as the Hong Kong dollar hit the 7.8500 per US dollar level, the lower end of its permitted trading band.
The total intervention is expected to reduce the city’s aggregate balance, a measure of banking liquidity, to about HK$127 billion from HK$180 billion in April, when the HKMA first started intervening.
The Hong Kong dollar was pegged at HK$7.80 to the US dollar in October 1983, with a trading band of 7.75 to 7.85 introduced in 2005. The HKMA is obliged to intervene to prevent the currency from trading outside this range. The currency traded at 7.8499 on Wednesday morning.
Asian currencies have been pressured in recent weeks because of a spike in the US dollar amid expectations of higher US interest rates. Analysts expect the Federal Reserve to raise rates three more times this year, with the next increase expected in June.
