HKMA Spends HK$3.26bn To Prop Up The Currency

The Hong Kong Monetary Authority (HKMA) said on Friday it has bought some HK$3 billion worth of Hong Kong dollars in a bid to support the currency, after it fell to the bottom limit of its trading band.

The de facto central bank of the SAR is obliged to do this to keep the Hong Kong dollar within the range pegged with the US dollar.

The HKMA's deputy chief executive, Howard Lee, said they made two foreign exchange transactions worth HK$3.26 billion, reducing the aggregate balance of the Hong Kong banking system by nearly 2 percent to around HK$176.5 billion.

He said the reduction would provide a more conducive environment for interest rate normalisation in Hong Kong.

Lee said the Hong Kong dollar's transaction volume remains at a normal level, and when local interest rates rise closer to that in America, there could be an outflow of foreign capital.

He said people should better manage their risks as interest rates increase, especially for those with mortgages and loans.

Lee also stressed that the authority will continue to support the Hong Kong dollar, when it reaches the weak point again.