Hong Kong Dollar (HKD)

What Is the Hong Kong Dollar (HKD)?

HKD is the truncation for the Hong Kong dollar, the official currency of Hong Kong, which is one of the most traded currencies globally. The HKD is utilized in both Hong Kong and the adjoining an area of Macau, whose currency, the pataca, is pegged to the Hong Kong dollar.

Understanding the HKD (Hong Kong Dollar)

The Hong Kong dollar is made up of 100 pennies and is frequently displayed with the HK$ prefix to separate it from other dollar-denominated currencies. Hong Kong is a leading global financial center and its economy is considered to be the freest in the world.

The Hong Kong dollar was first viewed as a distinct currency in 1863. Before then, different foreign currencies had been utilized and kept on being utilized even after the HKD's initiation. The Hong Kong dollar was banned by the Japanese manikin government in 1943 and reestablished in 1945 after World War II. Hong Kong is currently in sole control of the printing and administration of its currency, which is controlled by the Hong Kong Monetary Authority (HKMA).

In 1972, the HK dollar was pegged to the U.S. dollar at a rate of HK$5.65 to $1 USD. From that point forward, it has remained pegged to the dollar, with the HKMA adjusting its value now and again. The Hong Kong dollar has been pegged to a narrow trading band, which as of now runs somewhere in the range of HK$7.7500 and HK$7.8500 per USD. If, and when, the HKD hits either the upper or lower bound, the HKMA, which acts as the de facto central bank, mediates to settle the currency.

This trading band versus the USD has been in place starting around 1983, albeit the upper and lower limits have been adjusted occasionally. The HKMA has about $450 billion+ USD in foreign reserves to thwart any endeavors to break the peg with the USD. One striking endeavor was made by unbelievable hedge fund manager George Soros in 1998.

The HKD is the 10th most traded currency, and on the grounds that it is pegged to the U.S. dollar, with upper and lower limits, it exhibits no strong unique relationships with different currencies.

The Hong Kong Monetary Authority (HKMA)

Laid out in 1993, the Hong Kong Monetary Authority is the central bank of the island and acts to control inflation and keep up with the stability of the Hong Kong dollar (HKD) and of the banking sector through its monetary policy.

One of the key jobs of the HKMA is keeping up with currency stability. The linked exchange rate system is designed to settle the exchange rate between the Hong Kong dollar (HKD) and the United States dollar (USD). The fixed exchange rate system seeks to keep up with parity with the USD inside a tight reach, permitting HKD note-giving banks to issue new banknotes just when they deposit an equivalent value of U.S. dollars with the authority.

The HKMA holds one of the world's biggest currency reserves according to its economy.

Three Chinese note-giving banks — Hong Kong and Shanghai Banking Corporation Limited, the Bank of China (Hong Kong) Limited, and the Standard Chartered Bank (Hong Kong) Limited — are likewise authorized to issue Hong Kong dollars, subject to conditions spread out by the Hong Kong government. Banknotes are then run through a government exchange fund that holds U.S. dollars in reserves and records all transactions in the general accounts of the two currencies. Under capital control laws, a bank can utilize HK dollars on the off chance that it has the equivalent value of U.S. dollars on deposit.

Features

• HKD is the condensing for the Hong Kong dollar, the official currency of Hong Kong.
• The HKD has been pegged to a narrow trading band, which presently runs somewhere in the range of HK$7.7500 and HK$7.7600 per USD.
• The HKD is one of the most traded currencies globally.
• The HKD is the 10th most traded currency, and in light of the fact that it is pegged to the U.S. dollar with upper and lower limits, it exhibits no strong unique connections with different currencies.
• The Hong Kong dollar was first viewed as a distinct currency in 1863. Before then, different foreign currencies had been utilized and kept on being utilized even after the HKD's commencement.