No Large Sell-off Of Local Currency, Says HKMA

The Hong Kong Monetary Authority (HKMA) said on Thursday that there has not been a large sell-off of the local currency despite the Hong Kong dollar repeatedly hitting the low end of the trading band with its US dollar peg.

The authority said the recent weakening of the Hong Kong dollar has largely been down to an interest rate gap with the US dollar. It said it still has confidence in the peg to the greenback, which now dates back more than three-decades.

The HKMA said its recent moves to mop up the supply of the Hong Kong dollar in the banking system have been smooth and in line with expectations. The authority has now bought more than HK$51.3 billion in Hong Kong dollars from the foreign exchange market since last Thursday, its first interventions since 2015.

A deputy chief executive of the authority, Howard Lee, said the outflow so far has been small compared to capital inflows over the last several years which ran to a trillion dollars.

"The amount and the extent of the outflow will depend very much on market sentiment and also market view on a number of issues, including the path of the US dollar interest rate and the demand for the Hong Kong dollar in Hong Kong," Lee said.