Response on triggering of the weak-side CU at 7.85 for the first time, by Norman T.L. Chan, Chief Executive, Hong Kong Monetary Authority

Today, the HKMA's weak-side Convertibility Undertaking (CU) of HK$7.85 against the USD was triggered during London trading hours.  The HKMA bought HK$816 million from the market.  The Aggregate Balance will reduce by that amount to HK$179 billion on 16 April.

Norman T. L. Chan, Chief Executive of the HKMA, said, "this is the first time that the weak-side CU of 7.85 is triggered after the HKMA shifted the weak-side CU to that level in 2005, as part of the 'Three Refinements' to the operation of the Linked Exchange Rate System (LERS).  I reiterate that the HKMA will buy HKD and sell USD at 7.85 level to ensure that the HKD exchange rate will not weaken beyond 7.8500.  Such operations are normal and in accordance with the design of the LERS."

"Depending on capital flows, the weak-side CU may be triggered again in the future.  The HKMA is fully capable of maintaining the stability of the HKD and managing large scale capital flows.  There is no need to be concerned", Mr Chan added.

Hong Kong Monetary Authority
12 April 2018