Hong Kong Monetary Authority Steps in to Defend Its Weak Currency Amid Capital Outflow

Hong Kong Monetary Authority Steps in to Defend Its Weak Currency Amid Capital Outflow
Genuine HK$1,000 banknotes that are worth approximately $127 each as of May 21, 2022. Mike Clarke/AFP/Getty Images
Kathleen Li
Updated:

The Hong Kong dollar continues to weaken as the United States starts its interest rate hike cycle. To maintain Hong Kong’s linked exchange rate system, the Hong Kong Monetary Authority (HKMA) made five purchases of HK$17.586 billion ($2.24 billion) in five days. Market participants expect that Hong Kong may have a net outflow of $100 billion by the end of 2023.

Hong Kong has pegged its currency to the U.S. dollar since 1983, allowing a narrow range of HK$7.75 to HK$7.85 per U.S. dollar. This means HKMA would sell U.S. dollars when local currency needs support, or buy them when Hong Kong currency becomes too strong.

Kathleen Li
Kathleen Li
Author
Kathleen Li has contributed to The Epoch Times since 2009 and focuses on China-related topics. She is an engineer, chartered in civil and structural engineering in Australia.
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