The Hong Kong Monetary Authority (HKMA), the city's de facto central bank, has actively intervened in the foreign exchange market to defend the Hong Kong dollar's peg to the US dollar amid rising pressure and volatility. Starting in late June 2025, the HKMA began purchasing the Hong Kong dollar, with initial interventions involving the acquisition of HK$9.42 billion. This marked the first such intervention since 2023. Over the following weeks, the HKMA significantly increased its purchases, acquiring HK$20.018 billion on July 1, HK$29.634 billion on July 3, HK$14.829 billion on July 15, and additional amounts on other dates, totaling approximately HK$87 billion within three weeks. These interventions aimed to prevent the currency from weakening beyond its official trading band, as the Hong Kong dollar repeatedly hit the weak end of its trading range. The HKMA also sold US$2.55 billion in the process to maintain exchange rate stability. The interventions have led to a rise in Hong Kong interbank borrowing costs, with overnight borrowing rates reaching their highest level in nearly five months, reflecting tighter liquidity conditions in the money market. Despite these efforts, the currency defense has posed challenges to Hong Kong's nascent economic recovery, and there is growing speculation about the potential need for a bad bank to manage financial risks associated with the situation.