Hong Kong Dollar (HKD)

QUOTE AND NEWS
The Economic Times  Mar 9  Comment 
The currency hit 7.8440 per US dollar, inching closer to weak end of the 7.75-7.85 per dollar band.
Channel News Asia  Mar 8  Comment 
HONG KONG: The Hong Kong Monetary Authority said on Thursday (Mar 8) it had no immediate plans to issue bills to prop up the local currency, which hit fresh 33-year lows. Hong Kong's de facto central bank will wait and see if the local dollar...
The Economic Times  Dec 22  Comment 
Hong Kong dollar slid to HK$7.8291 per dollar on Thursday, surpassing an intraday low set in August.
Financial Times  Dec 21  Comment 




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The Hong Kong Dollar is the currency of the Chinese SAR of Hong Kong. It is denoted with a leading $, though in an international context the $ is often appended to an "HK" to distinguish the currency from other dollars. For example, within Hong Kong $48 is read "forty-eight dollars," while in an international context the same value might be written HK$48 and read "forty-eight Hong Kong dollars".

The chart at left shows the USD/HKD Currency Pair; the number of Hong Kong Dollars equivalent to 1 U.S. Dollar (USD).


Linked Exchange Rate System

Pegged exchange to US Dollar (1USD = 7.80HKD)

The linked exchange rate system of Hong Kong was launched on 17 October 1983, in reaction to a currency crisis arising from the Sino-British dispute concerning the political future of Hong Kong after 1997. The Hong Kong dollar was floating rapidly downwards, indeed plunging, in the foreign exchange market at that time, and the local authorities were desperate to find a solution to save it.

The solution, i.e. the linked exchange rate system, or simply the "link" which pegged the Hong Kong dollar to the US dollar at the rate of 7.80, was not a new invention. It was in essence a resurrection of the "currency board" scheme adopted in the territory from 1935 to 1972, with some modifications.

A bank can issue a Hong Kong dollar only if it has the equivalent exchange in US dollars on deposit. The currency board system ensures that Hong Kong's entire monetary base is backed with US dollars at the linked exchange rate. The resources for the backing are kept in Hong Kong's exchange fund, which is among the largest official reserves in the world. Hong Kong also has huge deposits of US dollars, with the 2008 estimate being at over US$ 700 billion

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