HK CENTRAL BANK SPENDS MORE IN 2020 TO KEEP ITS CURRENCY PEG
Hong Kong's central bank has intervened more than 40 times this year to maintain its peg to the US dollar, Saloni Sardana reported for Business Insider late on September 3, 2020.
It has bought the equivalent of $19.6 billion dollars of its own currency this year, more than it did in the whole of 2009 after the financial crisis. The peg has been in place since 1983 and allows the Hong Kong dollar to trade in a strict band of roughly 7.8 Hong Kong dollars per US dollar.
Analysts don't think the peg will be removed. One said: "Historically in 1997 when the economy shrunk by 10% and short-term rates and hiked up [around] 30%, the peg still survived. The peg is not in any danger of capitulating at this stage."
Hong Kong's central bank intervened 40 times in 2020 so far to preserve its currency's peg to the US dollar, according to official data, but analysts are confident that the trading band will remain intact. Data from the Hong Kong Monetary Authority shows that, so far this year, the de facto central bank has bought a net HK$152 billion ($19.6 billion).