The Hong Kong Monetary Authority published the record of discussion of the Exchange Fund Advisory Committee’s Currency Board Sub-Committee meeting held on 20 October 2025, including its review of Currency Board operations from 21 June to 8 October 2025. The Sub-Committee noted the Hong Kong dollar (HKD) traded between 7.7705 and 7.8500 per US dollar (USD), with the weak-side Convertibility Undertaking (CU) triggered 12 times, prompting the HKMA to buy HK$119.95 billion and reducing the Aggregate Balance to around HK$54 billion, while overall exchange and interbank market conditions remained smooth and orderly. Since mid-August, the HKD strengthened as short-term HKD interbank rates (HIBORs) firmed and net buying flows through Southbound Stock Connect continued; HIBORs generally tracked USD rates under the Linked Exchange Rate System but were also influenced by local funding conditions. As the Aggregate Balance declined, HIBORs picked up and the negative HKD-USD interest rate spread narrowed; following a mid-September reduction in the US federal funds target range, many banks cut Best Lending Rates by 12.5 basis points, leaving market Best Lending Rates at 5.125% to 5.625% at the end of the review period. The Monetary Base fell to HK$2,020.69 billion and, consistent with Currency Board principles, changes were fully matched by changes in foreign reserves; no abnormality was noted in Discount Window usage. On risks and vulnerabilities, the Sub-Committee highlighted signs of softening in the US economy amid higher tariffs, rising inflation and weakening labour demand, with fiscal and policy concerns affecting long-term US Treasury yields and a recent government shutdown adding uncertainty. It also noted resilient Asian growth in the first half of 2025 but ongoing trade policy uncertainty, moderated Chinese Mainland growth momentum in Q3 alongside tariff and housing-market risks, and Hong Kong’s solid Q2 growth with expectations of moderate growth ahead, a stabilising housing market and continued challenges in commercial real estate due to high vacancy rates.
Hong Kong Monetary Authority 2025-11-28
Hong Kong Monetary Authority reports 12 weak-side Convertibility Undertaking triggers and HK$119.95 billion purchases under the Currency Board
The Hong Kong Monetary Authority released the Exchange Fund Advisory Committee’s Currency Board Sub-Committee meeting record, reviewing operations from 21 June to 8 October 2025. The Hong Kong dollar traded between 7.7705 and 7.8500 per US dollar, with the weak-side Convertibility Undertaking triggered 12 times, leading to HKMA purchases of HK$119.95 billion. The Sub-Committee noted a softening US economy, resilient Asian growth, and moderated Chinese growth, with Hong Kong's economy showing solid Q2 growth but challenges in commercial real estate.