The Hong Kong Monetary Authority (HKMA) has reiterated its commitment to maintaining the linked exchange rate system, ensuring the Hong Kong dollar’s peg to the US dollar remains secure. This announcement comes amidst ongoing global economic uncertainties and market speculation regarding the peg’s stability.
According to the HKMA, the linked exchange rate system, established in 1983, is a cornerstone of Hong Kong’s monetary and financial stability. The system operates within a band of HK$7.75 to HK$7.85 per US dollar. The HKMA actively intervenes in the market to maintain the exchange rate within this range.
The HKMA possesses substantial foreign exchange reserves, exceeding US$400 billion, providing a strong buffer against potential capital outflows and speculative attacks. These reserves, coupled with the HKMA’s ability to adjust interest rates, enable it to effectively defend the peg.
Furthermore, the HKMA emphasizes that Hong Kong’s financial system is resilient, with well-capitalized banks and robust regulatory oversight. This resilience further strengthens the credibility of the linked exchange rate system.
The HKMA will continue to closely monitor market developments and stands ready to take necessary actions to maintain the stability of the Hong Kong dollar and the integrity of the linked exchange rate system.
