Peg

HONG KONG: The Hong Kong Monetary Authority (HKMA) on Wednesday intervened in the foreign-exchange market for the first time in seven weeks to defend the ...

The authority has had to intervene in the market 32 times this year, buying a total of HK$215.035 billion and selling US$27.39 billion amid persistent capital outflows. Ten major lenders - including the three note-issuing banks HSBC, Standard Chartered, and Bank of China (Hong Kong) - only increased their best lending rates last Friday or this week by 12.5 basis points, which is a much slower pace than the US. "The aggressive US interest rate rises have led to capital flowing out of the Hong Kong dollar and into the US dollar for higher yield," said Bruce Yam, an independent foreign-exchange analyst. The local currency has been pegged to the US dollar at HK$7.80 since 1983. The city's commercial banks have, however, waited out five rounds of rate increases this year before raising their own. This marks the HKMA's first intervention since Aug 9, and comes after capital outflows from Hong Kong within a week of the US Federal Reserve raising its funds target rate by 75 basis points to between 3 and 3.25% last Thursday.