HKMA intervenes to defend HK dollar peg

PHOTO: HKMA intervenes to defend HK dollar peg

HONG KONG - The Hong Kong Monetary Authority (HKMA) stepped into the currency market on Wednesday, selling HK$3.875 billion (S$609 million) in Hong Kong dollars as the local currency repeatedly hit the strong end of its trading range.

According to Reuters data, the latest intervention will lift the aggregate balance - the sum of balances on clearing accounts maintained by banks with the HKMA - to HK$200.659 billion on Dec 7.

Before this intervention, the HKMA had injected a total of $6.2 billion worth of Hong Kong dollars into the market.

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 currency traded at 7.7500/7.7501 against the US dollar at 0624 GMT.