HKMA Chief Executive's response on triggering of the weak-side CU at 7.85 for the first time
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Today (April 12), the Hong Kong Monetary Authority (HKMA)'s weak-side Convertibility Undertaking (CU) of HK$7.85 against the US dollar (USD) was triggered during London trading hours. The HKMA bought HK$816 million from the market. The Aggregate Balance will reduce by that amount to HK$179 billion on April 16.
The Chief Executive of the HKMA, Mr Norman Chan, said, "This is the first time that the weak-side CU of 7.85 is triggered after the HKMA shifted the weak-side CU to that level in 2005, as part of the 'Three Refinements' to the operation of the Linked Exchange Rate System (LERS). I reiterate that the HKMA will buy Hong Kong dollar (HKD) and sell USD at 7.85 level to ensure that the HKD exchange rate will not weaken beyond 7.8500. Such operations are normal and in accordance with the design of the LERS.
"Depending on capital flows, the weak-side CU may be triggered again in the future. The HKMA is fully capable of maintaining the stability of the HKD and managing large scale capital flows. There is no need to be concerned", Mr Chan added.
Ends/Thursday, April 12, 2018
Issued at HKT 21:10
Issued at HKT 21:10
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