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HKMA sells HK$3.1 bln to keep HK dlr in trading band

Published 05/11/2009, 04:21 AM
Updated 05/11/2009, 04:24 AM

HONG KONG, May 11 (Reuters) - Hong Kong's central bank, the Hong Kong Monetary Authority, injected HK$3.1 billion (US$400 million) into the money market on Monday afternoon to stem an appreciating Hong Kong dollar and keep it within its fixed trading band.

According to data on Reuters page , the latest intervention will lift the aggregate balance -- the sum of balances on clearing accounts maintained by banks with the HKMA -- to a record HK$218.397 billion by May 13.

The Hong Kong dollar, which has been boosted in recent weeks by capital inflows into the territory, drew buying on Monday as market players globally reduced their exposure to the U.S. dollar following better-than-expected U.S. jobs data on Friday. Dealers said that reduced the need to invest in the U.S. currency as a safe haven.

The Hong Kong dollar is pegged at 7.80 to the U.S. dollar but can trade between 7.75 and 7.85 to the U.S. dollar. Under the linked exchange rate mechanism, the HKMA is obliged to intervene in the market to keep the trading band intact if the currency hits 7.75 or 7.85. (Reporting by Christina Lo, Editing by Chris Lewis)

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