April 12, 2018 / 12:22 PM / a year ago

HKMA buys HK$816 mln as HK dollar hits weaker end of trading band

HONG KONG, April 12 (Reuters) - The Hong Kong Monetary Authority (HKMA) on Thursday bought HK$816 million ($103.95 million) Hong Kong dollars from the currency market as the local currency hit the weaker end of its trading range.

According to the HKMA, the latest intervention will reduce the aggregate balance - the sum of balances on clearing accounts maintained by banks with the authority - to HK$178.96 billion on April 16, when the withdrawn funds will be settled.

The Hong Kong dollar is pegged at 7.8 to the U.S. dollar, but can trade between 7.75 and 7.85. Under the currency peg, the HKMA is obliged to intervene when the Hong Kong dollar hits 7.75 or 7.85 to keep the band intact.

The currency traded at 7.8499 against the U.S. dollar at 1208 GMT. It has been weakening steadily since November owing to an abundance of cash in the banking system and a widening spread between interest rates in Hong Kong and the United States.

The HKMA last intervened in the market in 2015, selling Hong Kong dollars as the local currency repeatedly hit the stronger end of its trading band. ($1 = 7.8496 Hong Kong dollars)

Reporting by Donny Kwok, Twinnie Siu and Meg Shen; Editing by Anne Marie Roantree and Sam Holmes

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