Exchange Rate Calculator

The Hong Kong dollar (HKD) has maintained a stable exchange rate against the US dollar (USD) due to Hong Kong's Linked Exchange Rate System (LERS). This system pegs the HKD to the USD within a narrow band, ensuring minimal fluctuations. Over the past few months, the HKD/USD exchange rate has remained close to this fixed range, reflecting the effectiveness of the LERS and the Hong Kong Monetary Authority's (HKMA) commitment to currency stability.

The Linked Exchange Rate System

Established in 1983, the LERS pegs the HKD to the USD at a rate of HK$7.80 to US$1, allowing fluctuations between 7.75 and 7.85. This arrangement provides economic stability and investor confidence by maintaining a predictable exchange rate. The HKMA ensures this stability by intervening in the foreign exchange market, buying or selling HKD to keep the rate within the designated band. (en.wikipedia.org)

Recent Exchange Rate Trends

From March to May 2025, the HKD/USD exchange rate has exhibited minimal variation, staying within the prescribed band. For instance, on March 10, 2025, the exchange rate was 1 HKD = 0.1287 USD, corresponding to approximately 7.7687 HKD per USD. (valutafx.com) This consistency underscores the HKMA's effective management of the currency peg.

Factors Influencing the Exchange Rate

Several factors have contributed to the stability of the HKD/USD exchange rate:

• Capital Inflows: Increased investment in Hong Kong has led to upward pressure on the HKD. The HKMA has intervened by purchasing USD to prevent the HKD from breaching the strong end of the band. (ft.com)

• Interest Rate Differentials: The HKMA adjusts local interest rates to align with US rates, discouraging speculative attacks on the currency and maintaining the peg.

• Foreign Exchange Reserves: With over $420 billion in reserves, the HKMA has ample resources to defend the currency peg against market pressures. (reuters.com)

Market Speculation and HKMA's Response

Despite occasional market speculation about the sustainability of the peg, the HKMA has consistently reaffirmed its commitment to the LERS. In early May 2025, the HKD approached the strong end of its trading band, prompting the HKMA to intervene by purchasing USD, thereby increasing the monetary base and lowering local interbank rates. (ft.com)

Conclusion

The HKD/USD exchange rate has remained stable over the past few months, reflecting the robustness of Hong Kong's Linked Exchange Rate System and the HKMA's effective management. While external factors such as capital inflows and interest rate differentials influence the currency, the HKMA's proactive interventions ensure the peg's integrity, providing economic stability and investor confidence in Hong Kong's financial system.