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Demand for Hong Kong currency expected to remain strong

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Demand for Hong Kong currency expected to remain strong

Hong Kong’s de facto central bank expects demand for the local currency to continue, and bought $690 million on July 25 to defend the city’s 31-year-old peg to the US dollar.

Hong Kong first linked its currency to the greenback in 1983 when negotiations between China and the UK about the city’s return to Chinese rule spurred capital outflows.

It was kept at HK$7.8 per dollar until 2005, when policy makers committed to limiting the currency’s decline to HK$7.85 and capping gains at HK$7.75.

The authority, known as the HKMA, made dollar purchases on July 1 for the first time since December 2012. The Hong Kong dollar traded at HK$7.75 per dollar during morning trading in the city, at the strong-end of the permitted range.

In a July 16 note, Bank of America Merrill Lynch said that Hong Kong’s funding may remain tighter than normal as banks try to get more cash to prepare for possible disruptions from the Occupy Central movement, in addition to demand from mergers – just a day before Citigroup Inc. said funding tightness shown on June 30 was probably associated with political uncertainties in the city.

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Mauritius,
J. Balcikonio str. 9,
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Lithuania,

media contact

About

deVere Group – Foreign Exchange’s Public Relations Department deals with all areas of the media and external communications including international, national, regional, local, trade, consumer, print, broadcast, social and online. The Department aims to provide a helpful service to journalists, broadcasters and editors, amongst others, and reply to all media enquiries, including urgent enquiries out of hours, within agreed deadlines.

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Our press office does not have access to client details and will not be able to assist with individual client enquiries. Please contact deVere Group – Foreign Exchange’s Head of Public Relations on [email protected] or call +44 2071220925.