This undated photo shows the building of the Hong Kong Monetary Authority. (PHOTO / IC)

HONG KONG - The Hong Kong Monetary Authority bought HK$9.255 billion ($1.18 billion) from the market in New York trading hours to stop the local currency weakening and breaking its peg to the US dollar.

The Hong Kong dollar is pegged to a tight band of between 7.75 and 7.85 versus the US dollar.

The aggregate balance - the key gauge of cash in the banking system - will decrease to HK$306.337 billion on June 16, an HKMA spokeswoman said on Wednesday.

The intervention is the first time in around one month. A widening in the interest rate gap between the Hong Kong and US dollars contributes to the delince in Hong Kong currency.

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Abundant liquidity in the currency market, weak demand for loans and a lack of large-scale initial public offerings in Hong Kong would also contribute to the rate gap, according to HKMA officials.