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HK defends currency peg for first time since 2009

Published on Oct 21, 2012 12:45 AM

HONG KONG - Hong Kong's de facto central bank stepped in for the first time since 2009 to prevent the city's currency from rising against the US dollar, after it touched the upper limit of a range that triggers an intervention, Bloomberg reported on Sunday.

The Hong Kong Monetary Authority (HKMA) said it bought US$603 million (S$736 million) at HK$7.75 per dollar, which is the so-called strong side of the permitted convertibility range of HK$7.75 to HK$7.85 that obligates intervention.

The move, announced in an e-mailed statement on Saturday, was confirmed by spokesman Rhonda Lam who said the HKMA acted during New York trading hours.

"Funds continue to flow into Hong Kong given the monetary easing in the US and Europe," said currency analyst Kenix Lai at Bank of East Asia in Hong Kong. "That's evident by the rising stock market and property prices. I expect HKMA will still have to intervene in the near term as capital inflows continue."

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