HKMA Buys HK$9.5 Billion Overnight to Defend Currency Peg

The Hong Kong Monetary Authority (HKMA) bought HK$9.5 billion (US$1.2 million) on Wednesday as the local currency hit the weaker end of its trading range against the US dollar.

The de-facto central bank has started to intervene—for the first time since 2005—to defend the peg since mid-April. In this week, it has bought a total of HK$11.069 billion.   

Capital flowing out from the Hong Kong dollar will allow the Hong Kong dollar’s interest rates to normalize eventually, said HKMA’s Chief Executive Norman Chan on Tuesday.

The Hong Kong dollar is pegged at 7.8 to the US dollar, allowed to trade between 7.75 and 7.85. The HKMA, under the currency pegs, is obliged to intervene when the Hong Kong dollar hits 7.75 or 7.85.