Hong Kong’s de facto central bank said it sold another US$365 million to buy Hong Kong dollars during New York hours Thursday, the third time it has acted this week to defend the city’s longstanding dollar peg. The Hong Kong Monetary Authority had now sold about US$1.09 billion this week to stop the local currency trading beyond the weak end of its permitted range of 7.75 to 7.85 Hong Kong dollars per U.S. dollar.
The city’s aggregate balance, which measures the funds parked by banks in clearing accounts at the monetary authority, will decrease by HK$6.95 billion to HK$329.06 billion on May 16, HKMA said Friday. This week’s moves are the first time Hong Kong has dipped into its foreign-exchange reserves in three years to shore up the local currency against a surging greenback. The Hong Kong dollar has been tied to its U.S. equivalent since 1983, helping underpin the city’s emergence as one of the world’s major financial centers. The monetary authority stands ready to sell U.S. dollars if the local currency gets too weak, or buy them if the Hong Kong dollar becomes too strong.