The Hong Kong dollar rose to its highest level in 11 weeks on Friday as the US dollar tumbled in global markets in reaction to the Federal Reserves decision this week to buy US government debt in a bid to rescue the economy. The local currency rose to as high as 7.7503 against the US dollar, its highest level since January 5, Reuters data showed.
One dealer at a foreign bank said the Hong Kong dollar was set to hit the top end of its trading range within days. The currency is also being boosted by demand ahead of the settlement of HSBCs rights issue in early April, dealers said.
The Hong Kong currency is pegged at 7.8 to the US dollar but can trade between 7.75 and 7.85. Under the exchange rate mechanism, the Hong Kong Monetary Authority, the de-facto central bank, is committed to buying US dollars from licensed banks in exchange for Hong Kong dollars if the spot rate hits 7.75.
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