Quicktake
What the Hong Kong Dollar Peg Is and Why It Matters
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Pegged to the U.S. dollar since 1983, the Hong Kong dollar is usually a dull currency. Except when it isn’t. Heightened tension between the U.S. and China over the city’s autonomy has focused attention on it yet again.
The Hong Kong Monetary Authority, the de-facto central bank, has a mandate to keep the currency trading at HK$7.75 to HK$7.85 per U.S. dollar. The current band was set in 2005 and has never been broken, although it’s often tested. When it gets too close to one end or the other, the HKMA intervenes, either by buying or selling the city’s dollars.