HKMA Buys HK$9.4 Billion to Shore Up Hong Kong Dollar Peg

The Hong Kong Monetary Authority said it bought HK$9.42 billion (US$1.2 billion) of local currency on Thursday after the Hong Kong dollar touched the weak end of its permitted 7.75–7.85 per-US-dollar range. The purchase, conducted under the Linked Exchange Rate System, marked the first time since 2023 that the city’s de facto central bank stepped into the market to defend the peg. The intervention will reduce the banking system’s aggregate balance by the same HK$9.42 billion on Friday, a move the HKMA warned could push Hong Kong dollar interbank rates higher. “The HKMA will continue to closely monitor market developments and the external environment to ensure the orderly operation of the Hong Kong dollar markets,” Chief Executive Eddie Yue said in an online statement. Strategists said a prolonged period of carry trades favoring the US dollar has weighed on the Hong Kong dollar, and further weakness could prompt additional HKMA action, shrinking liquidity further. Interbank rates rose across the curve following the latest operation.