Exchange Rate Calculator

The exchange rate between the United States Dollar (USD) and the Hong Kong Dollar (HKD) has experienced notable fluctuations over the past few months, primarily due to the Hong Kong Monetary Authority's (HKMA) interventions to maintain the currency's peg. This report analyzes the recent trends, the HKMA's actions, and the broader implications for the USD/HKD exchange rate.

The Hong Kong Dollar Peg and Recent Interventions

Since 1983, the HKD has been pegged to the USD, maintaining a trading band between 7.75 and 7.85 HKD per USD. This arrangement requires the HKMA to intervene in the foreign exchange market to keep the currency within this range. In June 2025, the HKD approached the weaker end of its trading band, prompting the HKMA to purchase US$1.2 billion worth of HKD to support the currency. This intervention reduced the aggregate balance—the primary measure of banking system liquidity—by HK$9.42 billion, potentially leading to higher interbank rates. (reuters.com)

Factors Influencing the USD/HKD Exchange Rate

Several factors have contributed to the recent movements in the USD/HKD exchange rate:

• Capital Inflows and Outflows: Strong capital inflows into Hong Kong, driven by high-profile share offerings and perceived stock market undervaluation, have previously strengthened the HKD. Conversely, capital outflows can weaken the currency, necessitating HKMA intervention. (reuters.com)

• Interest Rate Differentials: The disparity between Hong Kong's low interbank rates and higher US interest rates has encouraged carry trades, where investors borrow in HKD to invest in higher-yielding US assets. This practice can exert downward pressure on the HKD, pushing it toward the weaker end of its trading band. (ft.com)

• Speculative Activities: Speculative positions that leverage low HKD borrowing costs to bet on other markets can influence the currency's value. The HKMA's interventions aim to counteract these pressures and maintain the stability of the HKD. (reuters.com)

Historical Context and Technical Analysis

Historically, the USD/HKD exchange rate has remained within the established trading band, with occasional interventions by the HKMA to maintain stability. Technical indicators, such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), have signaled buying opportunities in the past, reflecting the currency's movements within the peg's constraints. (tipranks.com)

Future Outlook

The HKMA's commitment to the currency peg suggests that the USD/HKD exchange rate will continue to trade within the 7.75 to 7.85 range. However, factors such as global economic conditions, interest rate differentials, and capital flow dynamics will influence the frequency and magnitude of future interventions. Analysts anticipate that the HKD will trade at 7.85 by the end of the current quarter and maintain this level over the next 12 months. (tradingeconomics.com)

Conclusion

The USD/HKD exchange rate remains closely managed under the HKMA's currency peg system. Recent interventions highlight the authority's proactive approach to maintaining stability amid fluctuating capital flows and interest rate differentials. Investors should monitor the HKMA's actions and global economic trends to assess potential impacts on the USD/HKD exchange rate.