Hong Kong Monetary Authority publishes Currency Board Sub-Committee record reporting orderly HKD markets and Monetary Base rising to HK$1,958.14 billion

The Hong Kong Monetary Authority released the record of discussion of the Exchange Fund Advisory Committee Currency Board Sub-Committee, including a review of Currency Board operations for 19 October to 24 December 2024. The Sub-Committee noted that the Hong Kong dollar traded within 7.7656–7.7848 against the US dollar, the Convertibility Undertakings were not triggered, the Aggregate Balance was stable at around HK$45 billion, and HKD exchange and interbank markets operated in a smooth and orderly manner. Interbank rates continued to track US dollar rates while reflecting local liquidity conditions, and following US federal funds target range cuts in early November and mid-December, banks reduced Best Lending Rates by a total of 37.5 basis points, leaving market Best Lending Rates at 5.25%–5.75% at the end of the period. The Monetary Base increased to HK$1,958.14 billion and, in line with Currency Board principles, the change was fully matched by foreign reserves, while no abnormality was noted in Discount Window usage. The risk review highlighted increased uncertainty linked to the incoming US administration, US fiscal sustainability and trade policies, the future US Federal Reserve policy path and the global outlook, alongside developments in Mainland China’s policy response and renminbi pressures, and softer momentum in Hong Kong’s economy in Q3 2024 with housing sentiment easing and commercial real estate remaining subdued, particularly in the office segment.