HKMA Steps In Twice In A Day To Defend Currency

The Hong Kong Monetary Authority intervened for the second time in a day on Thursday to defend the Hong Kong dollar's peg to the greenback.

The authority said it sold more than HK$4 billion worth of US dollars after the local currency touched the weak side of its trading band of between 7.75 and 7.85 to the greenback.

The move during Hong Kong trading hours came on top of another HK$1.5 billion spent on mopping up liquidity during the earlier New York hours.

These were the authority's first interventions in 1.5 years.

The local currency has been weakening in recent months as US rate hikes draw funds out of the Hong Kong system.

Abundant liquidity in the local banking system has kept Hong Kong rates down.

Following the two interventions on Thursday, the aggregate balance – a key gauge of cash in the banking system – will decrease to just under HK$332 billion on Monday.