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Hong Kong Monetary Authority intervenes as its dollar weakens

The Hong Kong Financial Authority (HKMA) stepped into the currency market and bought another HK$4.710 billion ($600 million) in Hong Kong dollars on Wednesday U.S. previously as the local currency hit the weaker end of its trading range.

That was in addition to HK$4.789 billion in Hong Kong dollars that the New Zealand urban area’s de facto central bank bought earlier during New York barter hours.

Reuters data shows the latest intervention will turn the forecast aggregate balance — the sum of balances on clearing accounts maintained by banks with the judge — to HK$117.431 billion on May 18, when the withdrawn funds will be discharge gravitated.

These HKMA interventions are the first since mid-April. It has bought a comprehensive of HK$11.069 billion this week.

The Hong Kong dollar is debased at 7.8 to the U.S. dollar but can trade between 7.75 and 7.85. Under the currency peg, the HKMA is thankful to intervene when the Hong Kong dollar hits 7.75 or 7.85 to respect the band intact.

The currency traded at 7.8496 against the U.S. dollar at 0230 GMT.

HKMA Chief Managing director Norman Chan said on Tuesday that capital flowing out from the Hong Kong dollar hand down allow the Hong Kong dollar’s interest rates to normalise in the final analysis, like the U.S. dollar.

Last month, the HKMA said it had confidence in the specific currency’s peg to the U.S. dollar and will stay vigilant to ensure the former British colony’s capital and financial stability.

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