Currency Peg Intervention From HKMA Continues Into Third Day

imageForex5 hours ago (Apr 22, 2020 08:00PM ET)

(C) Reuters. Currency Peg Intervention From HKMA Continues Into Third Day

(Bloomberg) — The Hong Kong Monetary Authority intervened for a third straight day this week to defend its currency peg as the local dollar touched the strong end of its trading band.

HKMA increased its bout of selling in the city’s currency to HK$3.37 billion ($435 million) in the early hours of Thursday local time, according to its page on Bloomberg. The aggregate balance, a measure of interbank liquidity, will increase on April 24 to HK$66.8 billion.

The interventions in the market this week are the first time that the HKMA has defended the peg at the strong end since October 2015.

The Hong Kong dollar was little changed at 7.7502 per greenback as of 6:46 a.m. local time. It has jumped 0.5% this year, the best gain among 31 major global exchange rates after the yen.

The recent currency strength was driven by carry trade players exploiting widening interest rate differentials. Higher local interest rates relative to the greenback have made buying the Hong Kong dollar an appealing trade in recent weeks, despite the dire economic pressures the city is facing.

Fitch Ratings on Monday downgraded Hong Kong’s long-term, foreign currency debt to AA- from AA, predicting real gross domestic product to fall 5% this year after a 1.2% decline in 2019.

(C)2020 Bloomberg L.P.

Currency Peg Intervention From HKMA Continues Into Third Day

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.