Hong Kong steps in as HK$ hits top of range
Source: Agencies |
October 21, 2012, Sunday
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Print Edition
Print Edition
THE Hong Kong Monetary Authority (HKMA) stepped in to the currency market yesterday for the first time since December 2009 as capital inflows strengthened the Hong Kong dollar, causing it to hit the top end of its trading range.
The HKMA sold US$603 million worth of Hong Kong dollars at the strong-side of the trading range of HK$7.75 to a US dollar in a move that will lift its aggregate balance - the sum of balances on clearing accounts maintained by banks with the authority - to HK$153.3 billion on October 24.
"The recent increase in demand for the local currency is related to a less strained European market, weakness in the US dollar and declining US interest rates, which have prompted capital inflows into currency and equity markets in the region," an HKMA spokesman said.
Traders said the strength in the Hong Kong dollar against the US dollar was in line with other Asian currencies because the US Federal Reserve's quantitative easing measures had weakened its currency.
The Hong Kong dollar is pegged at 7.8 to the US dollar but can trade between 7.75 and 7.85 to the US dollar. Under the currency peg, the HKMA is obliged to intervene when the Hong Kong dollar hits 7.75 or 7.85 to keep the band intact.
"The appreciation trend of RMB has attracted some money flows into Asia, including Hong Kong, to buy stocks and properties," said Kenix Lai, senior market analyst at Bank of East Asia, referring to the strength in China's renminbi that hit a record high against the US dollar this week.
The HKMA sold US$603 million worth of Hong Kong dollars at the strong-side of the trading range of HK$7.75 to a US dollar in a move that will lift its aggregate balance - the sum of balances on clearing accounts maintained by banks with the authority - to HK$153.3 billion on October 24.
"The recent increase in demand for the local currency is related to a less strained European market, weakness in the US dollar and declining US interest rates, which have prompted capital inflows into currency and equity markets in the region," an HKMA spokesman said.
Traders said the strength in the Hong Kong dollar against the US dollar was in line with other Asian currencies because the US Federal Reserve's quantitative easing measures had weakened its currency.
The Hong Kong dollar is pegged at 7.8 to the US dollar but can trade between 7.75 and 7.85 to the US dollar. Under the currency peg, the HKMA is obliged to intervene when the Hong Kong dollar hits 7.75 or 7.85 to keep the band intact.
"The appreciation trend of RMB has attracted some money flows into Asia, including Hong Kong, to buy stocks and properties," said Kenix Lai, senior market analyst at Bank of East Asia, referring to the strength in China's renminbi that hit a record high against the US dollar this week.
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