The Hong Kong dollar hovered at the top of its trading band on Friday, prompting the Hong Kong Monetary Authority (HKMA) to step in three times and sell HK$6.975 billion ($900 million) in total for US dollars to prevent the currency from rising beyond its fixed range, amid strong capital inflows. "There have been some funds flowing into the region," one dealer said, adding that signs of China's economic recovery was helping boost confidence in the region.
Dealers said the Hong Kong dollar had been boosted by equity-related fund inflows, as well as some safe-haven buying as its relative stability makes Hong Kong a good place to park cash while other currencies world-wide are volatile. ING's chief Asia economist Tim Condon said in a note on Friday that the strong reception of aluminium products maker China Zhongwang Holding's IPO yesterday was an example of strong demand for the Hong Kong currency.
The HKMA has been actively intervening in the foreign exchange market this week as the local currency continues to hit its upper trading limit at 7.7500 to the US dollar. Since Tuesday, the HKMA has injected a total of HK$21.313 billion, including Friday's intervention.