Over HK$100 billion of capital has flowed into local currency system since April

Source: Global Times Published: 2020/7/31 1:01:29

Hong Kong Photo: VCG

Hong Kong's banking system maintains ample liquidity with over HK$100 billion ($12.9 billion) of capital having flowed into the local currency system since April, the Xinhua News Agency reported Thursday, citing the Hong Kong Monetary Authority (HKMA), an unambiguous indication of the city's financial robustness despite US-China tensions, social unrest and a spike in COVID-19 infections. 

To date, flows of funds into the Hong Kong dollar system have hit HK$109 billion since April as the local foreign exchange and money markets continue orderly operations. 

The local currency once again touched the strong end of the 7.75-7.85 trading band against the US dollar under the Linked Exchange Rate System late Wednesday, prompting the HKMA to sell HK$3.1 billion into the market to defend the dollar peg, said the report. As a consequence, the local banking system's aggregate balance would increase to HK$183.36 billion on Thursday, according to HKMA data.

The HKMA also announced Thursday the extension of a temporary US Dollar Liquidity Facility - launched in April to give licensed banks access to an additional conduit to obtain US dollar liquidity - until March 31, 2021.

In an article posted on the authority's website earlier in July, HKMA Chief Executive Eddie Yue wrote that "the Hong Kong dollar has remained strong despite some worries that we might see significant capital outflows."

Net capital inflows of close to US$14 billion since April have resulted in the repeated triggering of the strong-side convertibility undertaking, Yue stated, highlighting the city's continued prosperity as the dominant gateway to the Chinese mainland. 

Posted in: ECONOMY

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