Hong Kong carried out foreign exchange intervention to support the national currency for the third time this week. The Hong Kong Monetary Authority (HKMA) bought $365 million worth of Hong Kong dollars during US business hours on Thursday, MarketWatch reported. As a result, the total amount of interventions in the foreign exchange market this week amounted to about $1.09 billion. The HKMA carried out such operations for the first time in three years against the background of the strengthening US dollar. In accordance with a policy in place since 1983, the HKMA aims to keep the national currency in the range of 7.75-7.85 dollars per $1. At the same time, the regulator must be constantly ready to carry out foreign exchange interventions. This policy has helped Hong Kong become one of the world’s leading financial centers, according to The Wall Street Journal. However, some investors and analysts have questioned the stability of Hong Kong’s monetary system in recent years amid the rise of Beijing’s influence, growing tensions between the US and China, and the PRC’s desire to ensure the widespread use of the yuan in the world. And yet, the regulator does not cease to emphasize its commitment to the system of pegging the currency to the US dollar, which is called the Linked Exchange Rate System (LERS). “LERS continues to function well, having survived many economic cycles in almost 40 years of operation. We will continue to closely monitor the situation in the markets to support monetary and financial stability,” the NKMA said in a statement. The last time the NKMA was forced to support the Hong Kong dollar in March 2019. However, a year later, the regulator began buying US dollars in order to curb the growth of its currency against the backdrop of loose monetary policy by the US Federal Reserve due to the pandemic crisis. Recently, the situation has been different: the US dollar has been actively rising against the backdrop of a Fed rate hike, and the Hong Kong currency has been under attack due to a new wave of coronavirus in China. At the same time, the events in Ukraine, which caused a surge in geopolitical tensions in the world, contributed to an increase in demand among investors for currencies related to the “safe haven” assets. The rate of the Hong Kong currency on Friday shows very slight fluctuations around the level of 7.85 dollars / $ 1, as well as the day before. Source: FINMARKET.RU

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