What it is
The currency of Hong Kong, one of the world’s main financial centres. It is tied to the US dollar by a currency board, so it moves only within a narrow band against the dollar and follows it against everything else.
Who issues it
The Hong Kong Monetary Authority runs the Linked Exchange Rate System. Most banknotes are issued under its authority by three commercial banks, which must lodge US dollars with it for every note they issue; the government issues the coins and the ten-dollar note.
How it is commonly described
- Managed or pegged
- Its exchange rate is steered or fixed by the authorities and does not float freely.
Under a currency board the monetary base is fully backed by US dollar reserves and the authority undertakes to buy or sell at the edges of the band. Hong Kong therefore has no independent interest-rate policy: its rates follow those of the United States.
These are descriptions people use, drawn from how the currency has commonly behaved. They are not promises about how it will behave.
What typically moves it
- The link itself, which confines the currency to its band against the US dollar
- The gap between Hong Kong and US money-market interest rates, which decides where in the band it sits
- Money flowing into and out of Hong Kong’s stock market
- The Monetary Authority’s operations at the edges of the band
These are the things people who follow this currency usually watch. They explain how the market works; they do not say what the exchange rate will do next.
The scheduled releases to know
- Federal Open Market Committee decision, which Hong Kong’s base rate followsPublished by Federal ReserveExplainer: Rates
- Gross Domestic ProductPublished by Census and Statistics DepartmentExplainer: GDP
- Consumer Price IndexPublished by Census and Statistics DepartmentExplainer: CPI
- Retail salesPublished by Census and Statistics DepartmentExplainer: Retail sales
No dates or figures are shown here: each publisher’s own calendar is the authority. The explainers are in Economic Events; a release without a link has no explainer on this site yet.
Its main session
Asia (Hong Kong hours). Hong Kong is one of the principal centres of the Asian trading day, between the Tokyo morning and the London open.
At GIO4X
A short history
The Hong Kong dollar has circulated since the nineteenth century. It was tied to sterling for much of the twentieth, floated from 1974, and has been linked to the US dollar under the Linked Exchange Rate System since October 1983. The Hong Kong Monetary Authority was established in 1993, and the present band, with an undertaking on each side, dates from 2005.
Words worth knowing
A reference page. Educational information, not investment advice or a recommendation to trade. It gives no exchange rate, no interest rate and no forecast.