December 11, 2012 / 6:31 AM / in 7 years

HKMA intervenes to defend HK dollar peg, selling HK$6.2 bln

HONG KONG, Dec 11 (Reuters) - The Hong Kong Monetary Authority (HKMA) stepped into the currency market on Tuesday, selling HK$6.2 billion ($800 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$214.529 billion on Dec. 13.

It was the second injection this week. Before this intervention, the HKMA had sold a total of $7.7 billion worth of Hong Kong dollars into the market 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 7.7500 against the U.S. dollar at 0623 GMT. ($1 = 7.7500 Hong Kong dollars) (Reporting by Michelle Chen; Editing by Anne Marie Roantree)

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