The Hong Kong Monetary Authority (HKMA), the territory's de facto central bank, reported it bought HK $390 billion from banks in exchange for US dollars in New York trade overnight to support the local currency. Since Monday, the HKMA has bought a total of HK$6.536 billion, including Thursday's intervention. Under Hong Kong's currency board system, the HKMA is committed to defending the pegged rate of HK$7.8 by buying Hong Kong dollars in exchange for US dollars.
Real time information available on Reuters page showed the transaction.
The Hong Kong dollar was trading at 7.7994/95 per US dollar versus 7.7997/98 in late Asian trade on Thursday.
The local currency has suffered selling pressure recently because US interest rates are higher than Hong Kong rates, enabling traders to earn an interest rate spread if they sell Hong Kong dollars for US dollars.
On Thursday, Hong Kong banks decided to keep interest rates unchanged despite another 25 basis point increase in US interest rates earlier this week.
A further widening in the interest rate gap between the Hong Kong dollar and the US dollar could trigger further fund outflows, dealers said.
The latest move by the HKMA will reduce the aggregate balance - the sum of balances on clearing accounts maintained by banks with the HKMA - to HK$9.265 billion after settlement on Monday.