Hong Kong Dollar (HKD)

QUOTE AND NEWS
The Economist  Apr 19  Comment 
THE Hong Kong dollar is one of the most and least manipulated monies in the world. For over 34 years the territory’s monetary authority, the HKMA, has kept it pegged to America’s currency at around HK$7.80 to the dollar, resisting all...
MarketWatch  Apr 17  Comment 
The Hong Kong dollar has been stabilized through foreign exchange interventions over the past days, but more action will be necessary to reverse its weakness that has been inspired by a stark interest rate spread between Hong Kong and the U.S.
Financial Times  Apr 16  Comment 
Monetary authority sends updates via an email alert and through WhatsApp
MarketWatch  Apr 16  Comment 
Asian stocks saw early gains erode by midmorning Monday, led by declines in Hong Kong and Chinese equities as investors assess airstrikes against Syria over the weekend and focus on the start of earnings season in the U.S. as well as speeches by...
MarketWatch  Apr 13  Comment 
The Hong Kong Monetary Authority said Friday that it bought Hong Kong dollars for the second time this week, as it continues to defend the currency’s nearly 35-year old link to the U.S. dollar.
Wall Street Journal  Apr 12  Comment 
One of the longest-running relationships in global currency markets is under threat. The Hong Kong dollar hit the weakest level against its U.S. counterpart that is permitted under the rules of a peg between the two currencies first implemented in...
Wall Street Journal  Apr 12  Comment 
The Hong Kong dollar is at the very limit of its trading band against its U.S. counterpart. The decades-old system looks outdated—until you consider the alternatives.




RELATED WIKI ARTICLES
 

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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