HONG KONG - HONG Kong's de facto central bank on Thursday said it would extend the maximum loan period for collateralised lending to local banks in anticipation tighter credit by the end of the year.

The Hong Kong Monetary Authority said in a statement that it will also charge interest below the interbank lending rates.

The two measures, which will take immediate effect until end of March next year, aimed to provide 'assurances to the market about the availability of liquidity in anticipation of banks' greater demand for funding towards the year end', the statement said.

Mr Joseph Yam, chief executive of the authority, told reporters on Thursday morning that they hoped banks could help out industries by making it easier to borrow money.

Mr Yam also said the HKMA bought HK$3.88 billion (S$742 million) of US dollars late on Wednesday, intervening in the market for the fourth time in recent weeks, to defend the local currency's peg to the greenback.

The latest intervention brought the aggregate balance in Hong Kong's banking system to US$37.82 billion (S$56.1 billion).