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HKMA sell HK$6.9 bln to keep HK$ in trading band

Posted on: April 12, 2009


Reuters – Saturday, April 4

HONG KONG, April 4 – Hong Kong’s central bank, the Hong Kong Monetary Authority, said on Saturday it had injected HK$6.975 billion into the currency market late on Friday in New York as the Hong Kong dollar <HKD=> hit the top of its trading band.

According to data on Reuters page <HKMAOOC>, the latest intervention will lift the aggregate balance — sum of balances on clearing accounts maintained by banks with the HKMA — to HK$167.766 billion by April 7.

The HKMA has intervened to keep the trading band intact since Wednesday as demand for the Hong Kong currency got a boost from inflows of funds into the local stock market and demand for a rights issue by banking giant HSBC <0008.HK>.

The Hong Kong dollar is pegged at 7.8 to the U.S. dollar but can trade between 7.75 and 7.85 to the U.S. dollar. Under the linked exchange rate mechanism, the HKMA is obliged to intervene in the market to keep the trading band intact if the currency hits 7.75 or 7.85.

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