HKMA buys HK$3.054b from market as currency weakens, aggregate balance below HK$100b mark

HONG KONG’S de-facto central bank bought HK$3.054 billion (S$545.9 million) from the market in New York trading hours to stop the local currency from breaking below its peg to the US dollar.

The action will bring the aggregate balance - the key gauge of cash in the banking system - below HK$100 billion. It will decrease to HK$96.977 billion on Tuesday (Nov 8), a Hong Kong Monetary Authority (HKMA) spokesperson said on Saturday.

The Hong Kong dollar is pegged to a tight band of between 7.75 and 7.85 versus the US dollar.

While analysts and other market participants have been watching the balance approach the HKD$100 billion mark with a view on potential market stresses, the immediate impact seems to be on interest rates.

The HKMA has bought Hong Kong dollars worth about US$30.7 billion from the market through 40 rounds of intervention since the Federal Reserve began raising rates in March. Its intervention has boosted local yields alongside those on US dollar assets. REUTERS