On New Year’s Day (1 January) 1993 at stroke of midnight HKT, HSBC, Bank of China and Standard Chartered officially introduced all new banknote designs. Authorities may have no interest in changing Hong Kong’s currency system just yet, but “most importantly, financial markets will start looking to Beijing to assess those preferences, rather than the words of the HKMA or other Hong Kong authorities,” he added. The institutional structure that underpins confidence in Hong Kong’s dollar peg may also have started cracking. “It is that huge surge in debt, falling asset prices, and ever cloudier outlook for Hong Kong’s economy which makes defending the how to become it security specialist, salary and degree requirements peg so much more problematic than during the Asian crisis of the late 1990s,” he said.

John Greenwood, credited as the chief architect of Hong Kong’s dollar peg after an article he wrote in 1983 provided the basis for the system, said ditching the peg would hurt the city’s role as an international financial center. By selling US dollars to buy Hong Kong dollars, the HKMA withdraws cash from the banking system, reducing the city’s aggregate balance and causing interest rates to rise. This strengthens the Hong Kong dollar, enabling it to stay within the trading band.

Top currency pairings for US dollar

The Hong Kong Monetary Authority (HKMA) is committed to keeping the Hong Kong dollar between 7.75 and 7.85 per greenback. When the currency reaches either end of the band, the authority will intervene and defend the peg, through buying or selling Hong Kong dollars on the currency market. Logan Wright, partner and head of China market research at the Rhodium Group, pointed out in March that risks to the Hong Kong dollar peg come mainly from market uncertainty about Beijing’s intentions for the currency. Worries that money might be leaking out of China — despite strict capital controls — via Hong Kong could prompt Beijing to act if the flight of cash intensifies, he added. The steep fall is a sign that investors are ditching the Hong Kong dollar.

Current exchange rates

Adopting the yuan in Hong Kong would imply adopting some of China’s financial controls in Hong Kong, or at least a far greater convergence of the city’s and mainland Chinese financial systems. In addition, it would not be possible to operate a Hong Kong-style international financial center if the yuan became the de facto currency in the city, Greenwood said. “We continue to expect the HKMA to maintain a pegged exchange rate regime and safeguard financial stability with regulatory measures,” S&P Global Ratings said late last month. The rating agency also affirmed its “AA+” and “A-1+” issuer credit ratings on Hong Kong. Since last May, the currency has touched 7.85, the weak end of the band, more than 40 times, prompting the HKMA to buy nearly 289 billion Hong Kong dollars ($37 billion) from banks to shore up its value, according to statistics released by the authority early last month.

HKD to USD conversion chart

Ackman tweeted in November that “it is only a matter of time” before the peg breaks. The HKMA holds one of the world’s largest currency reserves in relation to its everything you need to know about bonds 2020 economy. All investment services are provided by the respective Wise Assets entity in your location. Wise is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011, Firm Reference , for the issuing of electronic money.

About 40 years ago, global investors panicked during negotiations between Britain and China over the city’s future, triggering a sharp depreciation in the value of the Hong Kong dollar. The most likely alternative to maintaining the link to the US dollar would be to peg the currency to China’s yuan, Wright wrote. The former British colony still pegs the value of its money to that of the US dollar. It’s an arrangement that dates back almost four decades and has long been considered a guarantee of financial stability and prosperity. The Hong Kong dollar was originally set at a rate of 7.8 per US dollar, although it has been allowed to trade between 7.75 and 7.85 per US dollar since 2005.

The HKD is used in both Hong Kong and the neighboring territory of Macau, whose currency, the pataca, is pegged to the Hong Kong dollar. Commemorative banknotes have also been issued celebrating the note-issuing banks’ anniversaries as well as the Olympic Games held in Beijing in 2008 and 2022. In 1863, 1-mil (1⁄10-cent), 1-cent and 10-cent coins were introduced, followed in 1866 by 5-cent and 20-cents, half-dollar and 1-dollar.

The issue of Hong Kong dollar notes is governed today by the Hong Kong Monetary Authority (HKMA), the governmental currency board of Hong Kong. Under licence from the HKMA, three commercial banks issue their own banknotes for general circulation in the region. They are Hongkong and Shanghai Banking Corporation Limited; the Bank of China (Hong Kong) Limited; and the Standard Chartered Bank (Hong Kong) Limited. In most countries of the world the issue of banknotes is handled exclusively by a single central bank or government. The arrangements in Hong Kong are unusual but not unique; a comparable system is used in the United Kingdom, where seven banks issue banknotes.

Hong Kong’s currency is facing its biggest test since the global financial crisis of 2008. Our currency rankings show that the most popular Hong Kong Dollar exchange rate is the HKD to USD rate. The currency code for Dollars is HKD, and the currency symbol is $. Below, you’ll find Hong Kong Dollar rates and a currency converter. It has successfully withstood a series of daunting crises, including the stock market crash in 1987, the Asian financial crisis in 1998, the severe acute respiratory syndrome (Sars) outbreak in 2003, as well as the global financial crisis in 2008. The HKD is the ninth most traded currency, and because it is pegged to the U.S. dollar, with upper centerpoint energy inc stock quote and lower limits, it does not exhibit any strong unique correlations with other currencies.

1. You can send a variety of international currencies to multiple countries reliably, quickly, and safely, and at a rate cheaper than most banks.
2. “Hong Kong would not be able to operate a system that was fully and freely convertible to the mainland currency without undermining some of China’s financial controls,” Greenwood said.
3. In 1972, the HK dollar was pegged to the U.S. dollar at a rate of HK$5.65 to $1 USD.
4. The linked exchange system automatically self-corrects to maintain the stability of the Hong Kong dollar exchange rate.

During Japanese occupation the Dollar was temporarily suspended, replaced by the Japanese Military Yen. In 1945, the Hong Kong was re-issued, pegged to the British Pound at a rate of 16 HKD to 1 GBP. In 1972, the Hong Kong Dollar re-pegged to the US Dollar, with the rate changing multiple times over the next few decades. In 1945, paper money production resumed essentially unaltered from before the war, with the government issuing 1 cent, 5 cents, 10 cents, and 1-dollar notes, and the three banks issuing 5, 10, 50, 100 and 500-dollar notes. 1-dollar notes were replaced by coins in 1960, with only the 1-cent note issued by the government after 1965.

One of the key roles of the HKMA is maintaining currency stability. The linked exchange rate system is designed to stabilize the exchange rate between the Hong Kong dollar (HKD) and the United States dollar (USD). The fixed exchange rate system seeks to maintain parity with the USD within a tight range, allowing HKD note-issuing banks to issue new banknotes only when they deposit an equivalent value of U.S. dollars with the authority. The linked exchange system automatically self-corrects to maintain the stability of the Hong Kong dollar exchange rate. In 1863, London’s Royal Mint began issuing Hong Kong Dollar coins. By 1935, Hong Kong was the only country left on the silver standard.