HKMA buys HK$1.6 billion from market as currency hits weak end of trading band
FILE PHOTO: A Hong Kong dollar coin is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration
HONG KONG : Hong Kong's de-facto central bank bought HK$1.586 billion ($202 million) from the market on Thursday to stop the local currency weakening and breaking its peg to the U.S. dollar, the first time it has intervened in eighteen months.
The Hong Kong dollar is pegged to a tight band of between 7.75 and 7.85 versus the U.S. dollar.
It has been softening in recent months as U.S. interest rates rise while a surfeit of cash in the local banking system has kept Hong Kong rates pinned down.
The aggregate balance - the key gauge of cash in the banking system - will decrease to HK$336.005 billion on May 13, an HKMA spokeswoman said on Thursday.
