HK steps in for 2nd time in week
By Feng Jianmin |
October 24, 2012, Wednesday
|
Print Edition
Print Edition
THE Hong Kong Monetary Authority yesterday stepped into the currency market for the second time in a week to dampen appreciation of the Hong Kong dollar, which hovers near the strongest end of its trading range against the US dollar due to capital inflows.
The HKMA sold US$855 million worth of Hong Kong dollars at a rate of HK$7.75 per US dollar, it said in a statement yesterday.
That followed an injection of US$603 million worth of Hong Kong dollars on Friday by buying the US dollar at the same rate, the first such move since December 2009.
The Hong Kong dollar is pegged at HK$7.8 to the US dollar but is allowed to trade within the HK$7.75-7.85 range. Under the currency peg, the HKMA has to intervene when the Hong Kong dollar hits HK$7.75 or HK$7.85 to keep the band intact.
The Hong Kong dollar was flat at HK$7.7502 per US dollar yesterday, according to data compiled by Bloomberg News, with local financial markets closed for a public holiday.
Analysts said the recent hike in the Hong Kong dollar against the greenback, and gains in other Asian currencies, were largely because the US Federal Reserve adopted quantitative easing measures to weaken the currency.
"The strong inflow to the Hong Kong dollar money market relates to the recovery of global investors' sentiment towards Hong Kong's stock market," the Australia & New Zealand Banking Group said in a report. "We maintain our view that for a small open economy and a global financial center like Hong Kong, the currency system serves Hong Kong well. The certainty of currency rate means low cost of hedging by local incorporated companies."
The link between the Hong Kong dollar and the US dollar has helped the city's companies maintain stability in commercial contracts but its monetary policy depends heavily on that of the US.
ANZ economists said the interventions are likely to be temporary as global economic uncertainties may still bring capital outflows and a reversal in risk appetite.
The HKMA sold US$855 million worth of Hong Kong dollars at a rate of HK$7.75 per US dollar, it said in a statement yesterday.
That followed an injection of US$603 million worth of Hong Kong dollars on Friday by buying the US dollar at the same rate, the first such move since December 2009.
The Hong Kong dollar is pegged at HK$7.8 to the US dollar but is allowed to trade within the HK$7.75-7.85 range. Under the currency peg, the HKMA has to intervene when the Hong Kong dollar hits HK$7.75 or HK$7.85 to keep the band intact.
The Hong Kong dollar was flat at HK$7.7502 per US dollar yesterday, according to data compiled by Bloomberg News, with local financial markets closed for a public holiday.
Analysts said the recent hike in the Hong Kong dollar against the greenback, and gains in other Asian currencies, were largely because the US Federal Reserve adopted quantitative easing measures to weaken the currency.
"The strong inflow to the Hong Kong dollar money market relates to the recovery of global investors' sentiment towards Hong Kong's stock market," the Australia & New Zealand Banking Group said in a report. "We maintain our view that for a small open economy and a global financial center like Hong Kong, the currency system serves Hong Kong well. The certainty of currency rate means low cost of hedging by local incorporated companies."
The link between the Hong Kong dollar and the US dollar has helped the city's companies maintain stability in commercial contracts but its monetary policy depends heavily on that of the US.
ANZ economists said the interventions are likely to be temporary as global economic uncertainties may still bring capital outflows and a reversal in risk appetite.
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