HKMA's response to media enquiries

In response to media enquiries regarding triggering of the weak-side Convertibility Undertaking under the Linked Exchange Rate System, the Hong Kong Monetary Authority has the following responses:

The weak-side Convertibility Undertaking (CU) of HK$7.85 to US$1 under the Linked Exchange Rate System (LERS) was triggered during the New York trading hours earlier this morning.  The HKMA sold US dollars (USD) for Hong Kong dollars (HKD) of HK$9.42 billion upon the request of banks.  The Aggregate Balance will reduce to HK$164.1 billion on 27 June.  The weak-side CU was last triggered in May 2023.

Mr Eddie Yue, Chief Executive of the HKMA, stated, “The strong-side CU was triggered several times in early May, resulting in total inflows of HK$129.4 billion.  The subsequent abundance of liquidity in the HKD market led to a decline in HKD interbank rates, and the widened HKD-USD interest rate differential incentivized carry trade activities that sold HKD for USD, causing the HKD exchange rate to weaken.  Furthermore, market demand for HKD declined recently due to a combination of factors, including the peaking of the stock dividend payout season, the currency conversion of HKD proceeds raised from recent IPOs or bond issuances by non-local companies for repatriation, as well as the wrapping up of the seasonal half-year-end funding preparation.  These factors collectively led to the triggering of the weak-side CU, which is in line with the operation of the LERS.”

“The public should exercise caution in managing their interest rate risks and market risks.  Depending on the direction of capital flows and the supply-demand conditions for HKD, the weak-side CU may be triggered again in the future.  As the Aggregate Balance declines, HKD interbank rates may increase, which is consistent with the design of the LERS.  The HKMA will continue to closely monitor market developments and the external environment to ensure the orderly operation of the Hong Kong dollar markets,” he added.

Hong Kong Monetary Authority
26 June 2025