Overview

• The HKMA sold US$1.2 billion to buy Hong Kong dollars after the local currency hit HK$7.85 per US$1 at the weak end of its 7.75–7.85 trading band.
• This marked the HKMA’s first currency-market action since 2023 to defend its decades-old peg with the US dollar.
• The settlement will shrink the aggregate balance by HK$9.42 billion, reducing liquidity in Hong Kong’s banking system.
• Less liquidity in the interbank market is likely to drive up short-term interest rates, including the Hong Kong interbank offered rate (Hibor).
• Officials said the intervention targets currency arbitrageurs whose carry trades had amplified recent rate swings.