HKMA sells HK$5.425 bln to keep HK dlr in trading band - News

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CNBC ON DIGG

HKMA sells HK$5.425 bln to keep HK dlr in trading band

By: AFX | 10 Nov 2009 | 10:04 PM ET

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HONG KONG, Nov 11 (Reuters) - Hong Kong's central bank, the Hong Kong Monetary Authority (HKMA), on Wednesday morning injected HK$5.425 billion (US$700 million) into the money market to stem an appreciating Hong Kong dollar and keep it within its fixed trading band. This followed a HK$6.975 billion intervention by the HKMA during Hong Kong and New York trading hours on Tuesday. The local currency repeatedly hit the top of its trading band at 7.7500 on Wednesday morning as the U.S. dollar hovered near a 15-month low and upcoming IPO activity in Hong Kong boosted demand for the Hong Kong dollar, traders said. The city has been attracting fund inflows over recent months as its currency peg to a weak U.S. dollar makes Hong Kong assets attractive. 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$276.896 billion by Nov. 13. The Hong Kong dollar is pegged at 7.80 to the U.S. dollar, but can trade between 7.75 and 7.85 to the U.S. dollar. Under the linked exchange rate mechanism, the HKMA is obliged to intervene in the market to keep the trading band intact if the currency hits 7.75 or 7.85. By 0242 GMT, it was quoted at 7.7500/01. (Reporting by Christina Lo; Editing by Chris Lewis) ((susan.fenton@thomsonreuters.com; +852 2843 6367; Reuters Messaging: susan.fenton.thomsonreuters.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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