The city’s de facto central bank sold US$1.69 billion during New York trading hours on Thursday and bought the equivalent of HK$13.28 billion at HK$7.85 per US dollar, the authority said in a statement on Friday morning.
The moves would reduce the aggregate balance – a measure of the banking sector’s liquidity – by the same amount to HK$101.22 billion on Monday when the transactions would be settled, it added.
The local currency traded at HK$7.8497 after the intervention.
The move was the fifth time that the HKMA intervened in the market to defend the peg, buying HK$72.35 billion and selling US$9.22 billion since June 26.
Hong Kong pegged its dollar to the US currency in 1983 at HK$7.80 per US dollar. In 2005, the HKMA allowed its value to fluctuate between HK$7.75 and HK$7.85 and the authority was obliged to intervene to keep the currency in that range.
“There is a wide gap between the US and Hong Kong dollar interest rate, which encourages traders to conduct carry trades to earn big profits from the rate differentials,” said Tom Chan Pak-lam, chairman of the Hong Kong Institute of Securities Dealers.
