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The Hong Kong dollar is pegged in a narrow range of 7.75-7.85 to the U.S.
dollar.Hong Kong's central bank has sold more of its local currency so far this year than it did in any full year since the global financial crisis, in a bid to stop the unit strengthening and breaking its peg with the greenback. Capital has flown into the Asian financial hub in 2020, initially due to comparatively high interest rates, and subsequently attracted by a series of large initial public offerings, analysts said.Ant Group's looming $35 billion joint listing in Hong Kong and Shanghai, for example, is expected to keep demand high.The Hong Kong Monetary Authority (HKMA) sold HK$10.9 billion ($1.41 billion) on Tuesday in interventions in Hong Kong and U.S.
trading hours.That brings its total so far this year to HK$230.6 billion, beating the HK$227 billion for the full year of 2015, which was previously the highest since 2009, according to official data and Reuters calculations.This is a sharp turnaround from 2019, when some feared political uncertainty would drive money out of Hong Kong.The Hong Kong dollar is pegged in a narrow range of 7.75-7.85 to the U.S.
dollar.
When it weakens to HK$7.85 a dollar, the HKMA buys Hong Kong dollars from the market.
When it strengthens to $7.75, the HKMA sells Hong Kong dollars.Carie Li, economist at OCBC Wing Hang Bank in Hong Kong, said the factors driving the inflows had varied throughout the 2020."Back in April it was about the 'carry trade' as the Fed cut rates to nearly zero, but Hong Kong interest rates did not follow the trend immediately," she said.This meant traders sold U.S.
dollars for Hong Kong dollars to benefit from the better rates."At the end of June, there were strong equity inflows ...
and then a very strong IPO pipeline which resulted in very strong HK dollar demand," Li said.This seems set to continue."The Hong Kong dollar remains 'biddish' at its strong-side convertibility undertaking of 7.75 on the buoyant IPO flow," Ken Cheung, chief Asian FX strategist at Mizuho Bank wrote in a research note."Currently there are six IPO subscriptions underway, with the Chinese giant internet payment IPO (Ant Group) scheduled later this month."(This story has not been edited by TheIndianSubcontinent staff and is auto-generated from a syndicated feed.)
