Intervenzione: HK Monetary Authority Peg Defenders

These are the days defending the HKD peg.

All manner of currency pegs are being assaulted nowadays by speculators. A few days back we discussed the Danish krone coming under sustained assault but the authorities there successfully defending its link to the euro. But, here in Asia, there's another peg that some are betting will not withstand an attack: the Hong Kong dollar to the US dollar. Since 1983--a long time ago when Hong Kong was still a British colony--the monetary authority there pegged HKD 7.8 / USD 1. Having withstood the Asian financial crisis as other currencies in the region plummeted in value, Hong Kong has a well-deserved reputation for toughness in maintaining this peg.

However, that doesn't mean the Hong Kong Monetary Authority (HKMA) is not challenged every now and again. Since 2005, it has striven to keep the exchange rate between 7.75 to the US dollar on the strong end and 7.85 on the weak end. Unbeknownst to most casual currency observers, the HKMA has intervened thrice in four business days this week. First, on Monday...

The Hong Kong Monetary Authority (HKMA) stepped into the currency market again and sold HK$2.325 billion ($300 million) in Hong Kong dollars on Monday as the local currency hit the strong end of its trading range. The city's de-facto central bank has intervened multiple times in the market in the past fortnight. According to the HKMA, the latest intervention will lift the aggregate balance - the sum of balances on clearing accounts maintained by banks with the authority - to HK$275.3 billion on April 22.

...then on Wednesday:

The Hong Kong Monetary Authority (HKMA) intervened in the currency market, selling HK$1.55 billion ($200 million) in Hong Kong dollars on Wednesday as the local currency hit the strong end of its trading range [...] According to the HKMA, the latest intervention will lift the aggregate balance - the sum of balances on clearing accounts maintained by banks with the authority - to HK$293.863 billion on April 24.

On Thursday, they were at it again:

The Hong Kong Monetary Authority (HKMA) intervened in the currency market, selling HK$1.938 billion ($250 million) in Hong Kong dollars on Thursday as the local currency hit the strong end of its trading range [...] According to the HKMA, the latest intervention will lift the aggregate balance - the sum of balances on clearing accounts maintained by banks with the authority - to HK$295.8 billion on April 27.

These come after earlier interventions in April. How does that Donna Summer song go again? The HKMA works hard for the money.