The Hong Kong dollar bounced to pull away from the weak end of its trading band against the dollar after months of pressure, an early sign that sustained interventions by the city’s de facto central bank may be taking effect.

The local dollar touched a three-month high overnight, drifting away from the upper edge of the official 7.75-7.85 per dollar trading band. It held near 7.84 Friday morning. The Hong Kong Monetary Authority withdrew HK$3.376 billion ($430 million) from the market earlier this week — its 11th intervention since late June — in an ongoing effort to defend the currency peg.

The interventions aimed to support the currency by draining excess liquidity, a move that should ultimately push up funding costs and deter carry trades, in which traders borrow the cheap Hong Kong dollar to buy higher-yielding US assets. Following the consecutive HKMA interventions, Hong Kong’s aggregate balance — a measure of how much cash banks hold with the HKMA — fell by about two-thirds to HK$57.1 billion as of this week from its peak earlier in the year.

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The Hong Kong dollar has experienced an unprecedented swing this year, oscillating between both ends of the trading band. In early May, a surge in the local currency against a weakening dollar triggered HKMA moves to defend the peg. Within about a month, the authority was forced to reverse course and resume tightening operations to stabilize the currency.

Hong Kong dollar borrowing costs rose Thursday in the foreign exchange swap market, reflecting tighter liquidity conditions as one-month HKD forward points hit their highest level since early May. Traders will be watching today’s release of the interbank interest rate benchmark, or Hibor, for further insight into funding pressures.  

“We were always looking for that tipping point in the aggregate balance for Hibor to move and carry trade to ease,” said Fiona Lim, a senior foreign-exchange analyst at Malayan Banking Berhad in Singapore. “It is a matter of time for USD/HKD to start pulling away from the upper bound.”