Hong Kong Defends Dollar Peg on Hawkish Fed Speculation

What’s new: The Hong Kong Monetary Authority (HKMA) withdrew slightly over HK$1 billion ($127 million) from the foreign currency market on Wednesday morning, in a bid to defend the local currency’s U.S. dollar peg.

The trading will drive down Hong Kong’s aggregate balance, a measure of interbank liquidity, to about HK$118 billion after the settlement.

The city’s de facto central bank has intervened dozens of times since May as the Hong Kong dollar hit the weak end of its HK$7.75 to HK$7.85 trading band on an increasingly hawkish U.S. Federal Reserve.