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Hong Kong Reaffirms Dollar Peg After HKMA’s HK$129.4 Billion Intervention

Safeguarding the city’s currency framework despite geopolitical tensions, John Lee aims to deepen its offshore yuan market.

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A Hong Kong dollar coin is seen in this illustration photo May 31, 2017.     REUTERS/Thomas White/Illustration/File Photo
A Hong Kong dollar note is seen in this illustration photo May 31, 2017.     REUTERS/Thomas White/Illustration/File Photo
Banknotes of Chinese yuan and U.S. dollar are seen in this illustration picture taken September 29, 2022. REUTERS/Florence Lo/Illustration/File Photo

Overview

  • Chief Executive John Lee Ka-chiu said the US dollar peg will remain a core element of Hong Kong’s financial stability.
  • The Hong Kong Monetary Authority injected HK$129.4 billion in May to buy US$16.7 billion and keep the exchange rate within its 7.75–7.85 trading band.
  • Sharp swings in the Hong Kong dollar over the past two months, driven by equity inflows and regional currency moves, prompted the HKMA’s forceful interventions.
  • Some market watchers had urged a shift to a yuan peg, but Lee rejected the idea in favor of preserving the existing dollar arrangement.
  • Lee pledged to introduce more yuan-denominated products as part of plans to expand Hong Kong’s role as the world’s offshore renminbi hub.