Eddie Yue on recent HK dollar trends and the conditions for triggering the weak-side convertibility undertaking
余偉文談港元近期走勢
Hong Kong Monetary Authority Chief Executive Eddie Yue said the HK dollar has gradually weakened since mid-June to hover around 7.8460 to 7.8475, close to the 7.8500 weak-side convertibility undertaking, mainly because the widening Hong Kong-US interest rate gap has prompted carry trades and demand for HK dollars related to the stock market has fallen back. He said the automatic interest rate adjustment mechanism of the Linked Exchange Rate System will keep the HK dollar stable between 7.75 and 7.85 to 1 US dollar, and the Hong Kong Monetary Authority will closely monitor market conditions.
The Hong Kong Monetary Authority Chief Executive set out two causes of the HK dollar's weakness and explained how the Linked Exchange Rate System will automatically adjust as it approaches the weak-side convertibility undertaking, allowing readers to compare it with the exchange rate levels they are holding.
Source: 金管局·匯思 · hkma.gov.hk