March 9 (Reuters) - The Hong Kong Monetary Authority (HKMA) stepped into the currency market again on Saturday in U.S. trading hours, buying HK$1.51 billion in Hong Kong dollars as the local currency repeatedly hit the lower end of its allowable trading band.
The latest intervention will reduce the aggregate balance - the sum of balances on clearing accounts maintained by banks with the HKMA - to HK$74.8 billion on March 12, according to Reuters data.
The local dollar breached the weaker end of its trading range at 7.85 per U.S. dollar for the first time in almost six months on March 6, and has hit that level repeatedly since.
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.
HKMA last stepped into currency markets on Aug. 28, when it sold $1 billion worth of U.S. dollars for the local currency at 7.85, as the Hong Kong dollar reached its band’s weak side.
Excess cash in Hong Kong’s banking system has kept interest rates low and caused the currency to weaken since the start of 2019, analysts said.
In February, the one-month inter-bank rate (HIBOR) was lagging its dollar equivalent the most since January 2008, leading investors to borrow cheaply in the Hong Kong dollar to buy higher-yielding U.S. dollar assets and spurring capital outflows.
That gap has since narrowed but stays at 2008 levels. (Reporting by Twinnie Siu, Noah Sin and Kane Wu; writing by Noah Sin; Editing by Stephen Coates)