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6d ago

Asian Currencies Surge as Hong Kong Defends Dollar Peg, Taiwan Hits Multi-Year Highs

The Hong Kong Monetary Authority has intervened for the third time in four days to stabilize the HKD, while Taiwan's dollar continues its record-breaking rally, raising concerns over de-dollarization.

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A man walks past an advertisement promoting China's renminbi (RMB) or yuan, U.S. dollar and Euro exchange services at foreign exchange store in Hong Kong, China, August 13, 2015. German Bund yields edged up on Thursday following efforts by China's central bank to slow a sharp descent of the yuan that has prompted investors this week to seek safe-haven assets. REUTERS/Tyrone Siu/File Photo

Overview

  • The Hong Kong Monetary Authority (HKMA) conducted its largest intervention since 2020, selling HK$60.5 billion on Tuesday to maintain the HKD's peg to the US dollar.
  • Taiwan's dollar surged 10% over two days, reaching its strongest level in decades, driven by speculation over trade negotiations with the US.
  • Broader Asian currencies, including the yuan, won, and Singapore dollar, have appreciated sharply, reflecting reduced confidence in the US dollar amid trade-policy uncertainty.
  • Analysts warn of a potential de-dollarization trend as Asian economies shift away from traditional reliance on US assets and currencies.
  • Investor demand for Hong Kong stocks, major IPOs, and southbound Stock Connect activity has contributed to the HKD's strength and triggered HKMA interventions.