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HONG KONG - Hong Kong's central bank injected HK$1.937 billion (S$371 million) into the territory's banking system late on Friday in New York trading to cap the Hong Kong dollar's rise and keep the currency within its trading band.
A spokesman from Hong Kong Monetary Authority confirmed on Saturday it had injected a total of HK$3.255 billion on Friday.
The injections included one in New York trading, as Hong Kong dollar hit the strong side of the band in which the authority is obliged to keep the currency under an arrangement known as convertibility undertaking.
'The strengthening of the Hong Kong dollar to the strong side of the convertibility undertaking level reflects the continued strong demand for the currency amid tight liquidity within the banking system and deleveraging of previously long US dollar positions on risk reduction,' the spokesman said.
The authority injected a total of HK$11.61 billion in the past week.
The monetary authority injected HK$1.318 billion into the banking system in Hong Kong trading hours on Friday when the currency traded at 7.7500/01 to the US dollar. It was quoted at 7.7501/02 at 0806 GMT (4.06pm Singapore time) after the injection.
Hong Kong's currency is pegged at 7.8 to the US dollar but can trade between 7.75 and 7.85.
Major Hong Kong banks cut interest rates on Friday as interbank rates fell sharply, but the Hong Kong dollar remained strong. It has been boosted in recent weeks by unwinding of carry trades amid rising risk aversion and demand for Hong Kong dollars by banks to ease liquidity. -- REUTERS
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