December 12, 2012 / 8:36 AM / in 5 years

CORRECTED-HKMA defends HK dlr peg, selling HK$4.65 bln

(Corrects headline and first paragraph to say HK$4.65 bln, not HK$4.2 bln)

HONG KONG, Dec 12 (Reuters) - The Hong Kong Monetary Authority (HKMA) stepped into the currency market on Wednesday, selling HK$4.65 billion ($600 million) in Hong Kong dollars as the local currency repeatedly hit the strong end of its trading range.

According to Reuters data, the latest intervention will lift the aggregate balance - the sum of balances on clearing accounts maintained by banks with the HKMA - to HK$225.009 billion on Dec. 14.

Before this injection, the HKMA had sold a total of $9.25 billion worth of Hong Kong dollars since October 20.

Market players said besides the recent inflows to purchase stocks in Hong Kong, the strength of the local currency was also supported by booming U.S. dollar bond issuances as some of the issuers converted their proceeds to Hong Kong dollars for trade or investment use.

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 currency traded at 7.7501 against the U.S. dollar at 0835 GMT. ($1 = 7.7500 Hong Kong dollars) (Reporting by Michelle Chen; Editing by Anne Marie Roantree)

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