Core Viewpoint - The Hong Kong Monetary Authority (HKMA) activated the "weak-side convertibility guarantee" under the linked exchange rate system, selling USD and buying HKD worth 94.2 billion HKD, as the HKD weakened to 7.85 HKD per USD during the New York trading session on June 26 [1] Group 1 - The last occurrence of the "weak-side convertibility guarantee" was in May 2023, while the "strong-side convertibility guarantee" was triggered on May 3, 2023, when the HKD reached 7.75 HKD per USD [1] - HKMA's President, Eddie Yue, noted that the HKD had previously seen a capital inflow of 129.4 billion HKD due to the "strong-side convertibility guarantee" in May, indicating a shift in market dynamics [1] - Factors contributing to the HKD's weakening include reduced demand for HKD due to the end of the dividend payout season, non-local companies converting HKD from IPOs or bond issuances back to their currencies, and the completion of half-year funding needs [1] Group 2 - The HKMA emphasizes the importance of maintaining HKD exchange rate stability as part of its monetary policy objectives, given Hong Kong's open economy and lack of foreign exchange controls [2] - The HKMA provides convertibility guarantees, committing to sell HKD at the "strong-side" level of 7.75 HKD per USD and buy HKD at the "weak-side" level of 7.85 HKD per USD upon banks' requests [2] - Eddie Yue advised caution in managing interest rate and market risks, indicating that the HKD may trigger the "weak-side convertibility guarantee" again in the future as bank reserves decrease and HKD interbank rates may rise [2]

Core Viewpoint - The Hong Kong dollar (HKD) has recently experienced significant fluctuations against the US dollar, triggering both the "strong-side convertibility guarantee" and the "weak-side convertibility guarantee" due to changes in liquidity and interest rates [1][2]. Group 1: Currency Exchange and Monetary Policy - On April 30, the HKD/USD exchange rate hit 7.75, activating the "strong-side convertibility guarantee" [2]. - From May 3 to 6, the Hong Kong Monetary Authority (HKMA) injected a total of 129.4 billion HKD into the market, leading to an expansion of HKD liquidity [2]. - The injection of HKD significantly lowered the HIBOR rates, with the 1-month HIBOR dropping from 3.65% in April to 0.67%, and overnight rates approaching 0% [2]. Group 2: Market Reactions and Expectations - The widening of the HKD-USD interest rate differential (HIBOR-SOFR) has prompted carry trades, resulting in a depreciation of the HKD, which is now approaching the "weak-side convertibility guarantee" at 7.85 [2]. - The HKMA is expected to tighten liquidity in the short term, which may alleviate the depreciation pressure on the HKD as HIBOR rates rise again [2]. - Historically, the HKD has touched the "weak-side convertibility guarantee" four times since 2017, leading to pressure on the Hang Seng Index and Hang Seng Tech Index during those periods [2].

智通财经5月5日电，香港金管局在市场卖出95.32亿港元，因港元汇价触及强方兑换保证。 ...

Core Viewpoint - The Hong Kong Monetary Authority (HKMA) activated the "strong-side convertibility guarantee" at 7.75 HKD per USD, indicating a strong demand for HKD driven by stock market activities and upcoming large IPOs [1][2][3] Group 1: Currency Stability Mechanism - The HKMA purchased USD and sold a total of 46.539 billion HKD to maintain currency stability, increasing the banking system's aggregate balance to 91.309 billion HKD by May 7 [1] - The last activation of the "strong-side convertibility guarantee" occurred on October 28, 2020, highlighting the rarity of such events [2] - The HKMA's monetary policy aims to keep the HKD stable, with a target range of 7.75 to 7.85 HKD per USD under the currency board system [3][4] Group 2: Market Dynamics - Recent strong demand for HKD is attributed to increased stock investment activities and the appreciation of several regional currencies against the USD [2] - The HKMA is closely monitoring market dynamics to ensure orderly operations of the HKD market [2] - The influx of "southbound funds" into the Hong Kong stock market has contributed to the strengthening of the HKD [3] Group 3: Financial Environment - Hong Kong's financing activities remain robust, with the stock exchange ranking among the top five globally for new stock market financing [3] - The HKMA's commitment to maintaining the currency peg is supported by a fully backed monetary base with USD assets [3][5] - The automatic interest rate adjustment mechanism helps stabilize the HKD exchange rate by managing the supply and demand dynamics in the market [5]

Core Viewpoint - The Hong Kong dollar has strengthened against the US dollar to 7.75, reaching the strong-side convertibility guarantee level [1] Group 1 - The exchange rate movement indicates a significant appreciation of the Hong Kong dollar [1] - The strong-side convertibility guarantee level is a critical threshold for the Hong Kong Monetary Authority [1]