- The Hong Kong Monetary Authority bought $1.7 billion during the Hong Kong day on Friday at HK$7.75 a dollar
- That's the upper limit of a convertibility range that triggers intervention
- They also bought an additional $1.46 billion during New York hours
This was the 2nd day of intervention (following $400 million on Thursday) and the first since August 2014 (The HKMA injected a total of $9.7 billion to defend the peg in July and August 2014)
Inflows into HK are huge from China, with Chinese investors chasing HK stocks ... the Hang Seng index was up 7.9% on the week!
- Chinese investors bought 10.5 billion yuan of Hong Kong shares -- the maximum allowed -- on both Wednesday and Thursday
Says Credit Suisse:
- The HKMA will likely need to continue its intervention
- Given the strong influx of southbound funds, the Hong Kong dollar may well be pinned down at 7.75 in the weeks to come
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Note:
- Hong Kong pegged its currency to the U.S. dollar in 1983
- In 2005, a commitment was made to limit the HKD's decline to HK$7.85 per dollar & capping gains at HK$7.75
