Hong Kong’s monetary authority stepped in again to defend the local currency peg, buying more than HK$29.6 billion ($3.8 billion) two days after its last purchase.

The Hong Kong Monetary Authority (HKMA) bought HK$16.9 billion and HK$12.8 billion during the New York trading hours on Thursday, as the Hong Kong dollar’s exchange rate against the US dollar reached twice the weak end of its trading band at HK$7.85.

READ MORE: HKMA intervenes to support local currency following low Hibor level

The authority had made two attempts to defend the local currency’s rate earlier. Ample liquidity in the city’s banking system has kept the exchange rate hovering at a low level, forcing the HKMA to withdraw HK$20.02 billion and HK$9.42 billion on Wednesday and June 26, respectively.

The banking system's aggregate balance, the key gauge of cash in the banking system, is set to fall to HK$114.54 billion next Monday.

Under the Linked Exchange Rate System, the Hong Kong dollar exchange rate must stay within a narrow band of HK$7.75 to HK$7.85 per US dollar.

ALSO READ: An HKD drop to weak end of band may be short-lived

The HKMA last backed the weak Hong Kong dollar in 2023, when it intervened eight times and purchased a total of HK$54.51 billion in local currency. This followed 41 interventions in 2022, during which the HKMA purchased HK$242.08 billion.      

Contact the writer at gabylin@chinadailyhk.com