UPDATE 1-HKMA sells HK$3.875 bln in 2nd intervention - News

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UPDATE 1-HKMA sells HK$3.875 bln in 2nd intervention

By: AFX | 05 Nov 2009 | 04:09 AM ET

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HONG KONG, Nov 5 (Reuters) - Hong Kong's central bank, the Hong Kong Monetary Authority, intervened for a second time on Thursday, selling another HK$3.875 billion (US$500 million) for U.S. dollars in the afternoon as the local currency continued to hit the top of its trading band. Earlier in the day, the HKMA injected HK$3.875 billion into the market.

The latest move brought the total injection for the day to HK$7.75 billion as of 0839 GMT. The city has been attracting fund inflows over recent months as its currency peg to a weak U.S. dollar makes Hong Kong assets look attractive. The U.S. dollar was expected to remain under pressure after the Federal Reserve reiterated its commitment on Wednesday to keep interest rates low for an "extended period", dealers said. According to data on Reuters page, the latest intervention will lift the aggregate balance -- the sum of balances on clearing accounts maintained by banks with the HKMA -- to HK$256.142 billion by Nov. 9. The Hong Kong dollar is pegged at 7.80 to the U.S. dollar but can trade between 7.75 and 7.85. Under the linked exchange rate mechanism, the HKMA is usually obliged to intervene in the market to keep the trading band intact if the currency hits 7.75 or 7.85. At 0843 GMT, it was quoted at 7.7500/01. (Reporting by Christina Lo; Editing by Jacqueline Wong) ((christina.lo.reuters.com@reuters.net; +852 2843 6960; Reuters Messaging:christina.lo.reuters.com@reuters.net)) Keywords: HONGKONG/HKMA (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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