Hong Kong dollar is world's ninth-most traded currency

SHANGHAI • The Hong Kong dollar became the ninth-most traded currency in the world earlier this year, ranking just below the yuan, according to the Bank for International Settlements (BIS).

The city's currency accounted for 3.5 per cent of global average daily turnover in April, compared with 1.7 per cent during the same month in 2016, the latest triennial survey by BIS showed.

That helped it climb four spots and nearly match the yuan, whose share rose to 4.3 per cent from 4 per cent in 2016.

April was a wild month for the Hong Kong dollar as a surge in borrowing costs squeezed bears and pushed it away from the weak end of its trading band.

Meanwhile, the yuan was going through its dullest period in more than a year.

Hong Kong also gained in prominence as a foreign exchange hub: Average daily trading in the city climbed to US$632 billion (S$870 billion) in April, just shy of Singapore's Asia-leading US$633 billion.

"Hong Kong's growth reflects still-flourishing financial activities in the Hong Kong dollar market, including IPOs (initial public offerings) and debt financing," said chief Asian FX strategist Ken Cheung at Mizuho Bank.

"Growing integration between Hong Kong and mainland China could also be a source of growth in HKD trading activities."

The currency of the former British colony - which is pegged to the greenback - has strengthened 0.26 per cent this month as stocks rebounded.

The benchmark Hang Seng Index has risen 4.6 per cent even as anti-government protests show no signs of stopping after three months.

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A version of this article appeared in the print edition of The Straits Times on September 18, 2019, with the headline 'HK dollar is world's ninth-most traded currency'. Print Edition | Subscribe