HONG KONG Oct 20 The Hong Kong Monetary
Authority (HKMA) stepped in to the currency market on Saturday
for the first time since December 2009 as capital inflows
strengthened the Hong Kong dollar, causing it to hit the
top end of its trading range.
The HKMA sold $603 million worth of Hong Kong dollars at the
strong-side of the trading range of HK$7.75 to a U.S. dollar in
a move that will lift its aggregate balance -- the sum
of balances on clearing accounts maintained by banks with the
authority -- to HK$153.3 billion on Oct. 24.
"The recent increase in demand for the local currency is
related to a less strained European market, weakness in the USD
and declining US interest rates, which have prompted capital
inflows into currency and equity markets in the region," an HKMA
spokesman said in a statement.
Traders said the recent strength in the Hong Kong dollar
against the U.S. dollar was in line with other Asian currencies
because the U.S. Federal Reserve's quantitative easing measures
had weakened its currency.
The Hong Kong dollar is pegged at 7.8 to the U.S. dollar but
can trade between 7.75 and 7.85 to the U.S. dollar. Under the
currency peg, the HKMA is obliged to intervene when the Hong
Kong dollar hits 7.75 or 7.85 to keep the band intact.
"The appreciation trend of RMB recently has attracted some
money flows into Asia, including Hong Kong, to buy stocks and
properties," said Kenix Lai, senior market analyst at Bank of
East Asia, referring to the strength in China's renminbi that
hit a record high against the U.S. dollar this week.