The Hong Kong Monetary Authority, the city’s de facto central bank, sold U.S. dollars during New York hours on Wednesday to defend the city’s longstanding currency peg to the greenback.
Asia’s currencies, including Hong Kong’s, are coming under pressure as the U.S. Federal Reserve raises interest rates more aggressively than other central banks in order to contain decades-high inflation. And that is boosting the appeal of U.S. dollar-denominated fixed-income assets.
Hong Kong’s currency has been tied to that of the U.S. since 1983 and trades within a permitted range of 7.75 to 7.85 Hong Kong dollars per USD. The HKMA sells U.S. dollars if the local currency gets too weak or buys them if the Hong Kong dollar gets too strong.
During New York hours on Wednesday, the HKMA sold US$1.63 billion against the Hong Kong dollar at the 7.8500 level, it said.
The Hong Kong dollar HKDUSD, -0.00 was trading little changed at 7.8498 per U.S. dollar in the morning Asian session on Thursday.
Measured in local-currency terms, the HKMA has sold HK$117.075 billion (US$14.91 billion) worth of U.S. dollars since its first foreign-exchange intervention on May 11, official data shows.
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