April 13, 2018 / 9:43 PM / 3 months ago

HKMA buys another HK$3.37 billion as HK dollar hits weak end of trading band

NEW YORK (Reuters) - The Hong Kong Monetary Authority (HKMA) stepped into the currency market and bought another HK$3.368 billion (301.2 million pounds) in Hong Kong dollars late in the U.S. session on Friday, as the local currency hit the weaker end of its trading range.

A Hong Kong dollar note is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration

That was in addition to HK$3.038 billion in Hong Kong dollars that the central bank bought earlier in the U.S. session on Friday.

According to the HKMA, the latest intervention will reduce the aggregate balance - the sum of balances on clearing accounts maintained by banks with the authority - to HK$170.114 billion on April 17, when the withdrawn funds will be settled.

The Hong Kong dollar is pegged at 7.8 to the U.S. dollar, but can trade between 7.75 and 7.85. 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 7.8498 against the U.S. dollar at 2113 GMT. It has been weakening steadily since November owing to an abundance of cash in the banking system and a widening spread between interest rates in Hong Kong and the United States.

Reporting by Saqib Iqbal Ahmed; Editing by Matthew Lewis

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