HK says U.S. downgrade expected, will monitor market reaction

HONG KONG (Reuters) - Hong Kong's central bank, which ranks among the world's top 10 largest holders of foreign currency reserves, said on Saturday that the downgrade of the United States' triple-A credit rating was expected and it would monitor how global financial markets reacted to the move.

"This downgrade was in line with market expectations, reflecting the medium and long-term pressure that the United States' public finances face," a spokesperson for the Hong Kong Monetary Authority said.

Standard & Poor's cut the United States' long-term credit rating to AA-plus on Friday over concerns about the nation's budget deficits and rising debt burden.

"It will take time to observe the impacts from this downgrading on financial markets. The Hong Kong Monetary Authority will continue to closely monitor the reactions of the downgrading on the global financial markets," the spokesperson said.

The Hong Kong dollar is pegged to the dollar.

(Reporting by Hong Kong bureau; Editing by Susan Fenton)