(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
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