Hong Kong’s Foreign Exchange Intervention Highest Since 2009 Crisis

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Hong Kong’s central bank has sold more of its local currency so far this year than it did in any full year since the global financial crisis, in a bid to stop the unit strengthening and breaking its peg with the greenback. Capital has flown into the Asian financial hub in 2020, initially due to comparatively high interest rates, and subsequently attracted by a series of large initial public offerings, analysts said.

Ant Group’s looming $35 billion joint listing in Hong Kong and Shanghai, for example, is expected to keep demand high.

The Hong Kong Monetary Authority (HKMA) sold HK$10.9 billion ($1.41 billion) on Tuesday in interventions in Hong Kong and U.S. trading hours.

That brings its total so far this year to HK$230.6 billion, beating the HK$227 billion for the full year of 2015, which was previously the highest since 2009, according to official data and Reuters calculations.

This is a sharp turnaround from 2019, when some feared political uncertainty would drive money out of Hong Kong.

The Hong Kong dollar is pegged in a narrow range of 7.75-7.85 to the U.S. dollar. When it weakens to HK$7.85 a dollar, the HKMA buys Hong Kong dollars from the market. When it strengthens to $7.75, the HKMA sells Hong Kong dollars.

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