HKMA buys HK$3.054 billion from market as currency weakens, aggregate balance below HK$100 billion mark

HKMA buys HK$3.054 billion from market as currency weakens, aggregate balance below HK$100 billion mark
HKMA buys HK$3.054 billion from market as currency weakens, aggregate balance below HK$100 billion mark
© Reuters. FILE PHOTO: A Hong Kong dollar coin is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration/File Photo

HONG KONG (Reuters) – Hong Kong’s de-facto central bank bought HK$3.054 billion ($389.1 million) from the market in New York trading hours to stop the local currency from breaking below its peg to the U.S. dollar.

The action will bring the aggregate balance – the key gauge of cash in the banking system – below HK$100 billion. It will decrease to HK$96.977 billion on Tuesday, a Hong Kong Monetary Authority (HKMA) spokeswoman said on Saturday.

The Hong Kong dollar is pegged to a tight band of between 7.75 and 7.85 versus the U.S. dollar.

While analysts and other market participants have been watching the balance approach the HKD$100 billion mark with a view on potential market stresses, the immediate impact seems to be on interest rates.

The HKMA has bought Hong Kong dollars worth about US$30.7 billion from the market through 40 rounds of intervention since the Federal Reserve began raising rates in March. Its intervention has boosted local yields alongside those on U.S. dollar assets.

($1 = 7.8493 Hong Kong dollars)

Leave a Reply

Your email address will not be published. Required fields are marked *

New Brokers
2.8 rating
Buy & sell Crypto in minutes
3.0 rating
Note: Investing involves risks. You can lose your deposit. We advise you to only invest in financial products which match your knowledge and experience.
2.0 rating
Interactive Brokers attracts active traders with low per-share pricing, an advanced trading platform.
4.3 rating
eToro is the world’s leading social trading platform, with thousands of options for traders and investors.
Risk Warning: The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory or other services by AdonFinance. In addition, the content of the website offers no opinion with respect to the suitability of any security or any specific investment. Trading foreign exchange, stocks, cryptocurrencies and commodities is potentially high risk and may not be suitable for all investors. The high level of leverage can work both for and against traders. Before any investment with any broker you need to carefully consider your targets, previous experience, and risk level. Forex trading can result in the loss of your money, as a result, you are expressly cautioned that you should never invest or trade with money that you cannot afford to lose. For the avoidance of doubt, AdonFinance's service provides Brokers reviews in the Financial market. AdonFinance, its subsidiaries, agents or affiliates will assume no responsibility whatsoever for your trading activity. © Copyright 2021 AdonFinance