The Hong Kong dollar stayed at the top of its trading band against the US dollar on Thursday, which might force the Hong Kong Monetary Authority (HKMA) to step in again to prevent the local currency from rising beyond its fixed range. Dealers attributed the Hong Kong dollar's strength to the general weakness of the US dollar in the global market.
The HKMA intervened in the currency market and sold HK$2.325 billion ($300 million) for US dollars in New York trading on Wednesday as the local currency hit its upper trading limit at 7.7500.
As a result of the HKMA's intervention, the aggregate balance on clearing accounts maintained by banks with the HKMA, will increase to HK$181.02 billion by October 9. A falling US dollar makes Hong Kong dollar-denominated assets look comparatively cheap due to the local currency's peg to the US dollar, dealers said. The HKD is pegged at 7.80 to the US dollar but can trade between 7.75 and 7.85.
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