HONG KONG: The Hong Kong Monetary Authority sold HK$3.1 billion to defend the currency peg here the other day as the rush of mainland funds coming in to buy local stocks boosted the Hong Kong dollar here the other day.
The local currency hit 7.75 to the US dollar the strong side of convertibility undertakings several times in the afternoon prompting the de-facto central bank to step in and spend US$400 million.
Market sentiment is bullish and demand for the Hong Kong dollar has risen, it said.
Analysts believe the inflows are unlikely to create a stock market bubble. The latest invervention will lift the aggregate balance the sum of balances on clearing accounts maintained by banks with the authority to HK$242.29 billion on April 13.
The last injections were in July and August last year when the HKMA intervened in the market 24 times, at a total of HK$75.3 billion.
Independent analyst Chan Yan-chong told Sing Tao Daily the size of the intervention shows the inflow into the local stock market is manageable.
He said this will not generate stock market bubbles at the moment as local stocks are just “catching up.”
Shanghai shares have risen 60 percent since November. “Stock prices are still low … there is still a way to go to stock market bubbles,” Chan said.
