Linked Exchange Rate System
E283264
The Linked Exchange Rate System is Hong Kong’s currency regime that pegs the Hong Kong dollar to the U.S. dollar within a narrow trading band to maintain monetary and financial stability.
All labels observed (2)
| Label | Occurrences |
|---|---|
| Linked Exchange Rate System canonical | 1 |
| Linked Exchange Rate System of Hong Kong | 1 |
Statements (50)
| Predicate | Object |
|---|---|
| instanceOf |
currency board system
ⓘ
exchange rate regime ⓘ monetary policy framework ⓘ |
| administeredBy | Hong Kong Monetary Authority ⓘ |
| anchorCurrency |
US dollar
ⓘ
surface form:
United States dollar
|
| anchorCurrencyCode |
US dollar
ⓘ
surface form:
USD
|
| backingRequirement | monetary base fully backed by foreign reserves ⓘ |
| centralParity | 7.80 HKD per 1 USD ⓘ |
| continuity | has remained in place since 1983 ⓘ |
| convertibilityUndertakingForBanks |
HKMA buys US dollars from banks at 7.75 HKD per USD
ⓘ
HKMA sells US dollars to banks at 7.85 HKD per USD ⓘ |
| country |
Hong Kong, China
ⓘ
surface form:
Hong Kong
|
| effectOnExchangeRate | keeps HKD–USD rate within a narrow band ⓘ |
| effectOnInflation | imports US monetary conditions into Hong Kong ⓘ |
| foreignReservesCurrencyComposition | predominantly US dollars ⓘ |
| geographicalScope |
Hong Kong, China
ⓘ
surface form:
Hong Kong Special Administrative Region
|
| implies |
Hong Kong does not have an independent discretionary interest rate policy
ⓘ
Hong Kong interest rates are closely linked to US interest rates ⓘ |
| introducedBy |
Government of the Hong Kong Special Administrative Region
ⓘ
surface form:
Government of Hong Kong
|
| introducedInYear | 1983 ⓘ |
| introducedOn | 1983-10-17 ⓘ |
| legalTenderCurrency | Hong Kong dollar ⓘ |
| lowerExchangeRateBound | 7.75 HKD per 1 USD ⓘ |
| monetaryPolicyInstrument |
automatic interest rate adjustment via currency board mechanism
ⓘ
convertibility undertakings for the banking system ⓘ |
| monetaryPolicyRule | maintain exchange rate stability against the US dollar ⓘ |
| notableReform |
introduction of explicit convertibility undertakings in 1998
ⓘ
refinement of trading band to 7.75–7.85 in 2005 ⓘ |
| pegsCurrency | Hong Kong dollar ⓘ |
| pegsCurrencyCode |
Hong Kong dollar
ⓘ
surface form:
HKD
|
| pegsToCurrency |
US dollar
ⓘ
surface form:
United States dollar
|
| pegsToCurrencyCode |
US dollar
ⓘ
surface form:
USD
|
| policyObjective |
maintain financial stability in Hong Kong
ⓘ
maintain monetary stability in Hong Kong ⓘ provide a stable monetary environment for economic growth ⓘ |
| reasonForIntroduction |
address severe exchange rate volatility
ⓘ
restore confidence in Hong Kong’s monetary system ⓘ stabilize the Hong Kong dollar ⓘ |
| region | Asia ⓘ |
| relatedConcept |
convertibility undertaking
ⓘ
currency board ⓘ fixed exchange rate ⓘ monetary base ⓘ |
| relatedInstitution |
Hong Kong Monetary Authority
ⓘ
surface form:
Exchange Fund of Hong Kong
|
| supports |
free flow of capital in Hong Kong
ⓘ
open financial markets in Hong Kong ⓘ |
| tradingBandRegime | convertibility zone ⓘ |
| tradingBandWidth | 0.10 HKD per USD ⓘ |
| upperExchangeRateBound | 7.85 HKD per 1 USD ⓘ |
| usedBy | Hong Kong banking system ⓘ |
Referenced by (2)
Full triples — surface form annotated when it differs from this entity's canonical label.
this entity surface form:
Linked Exchange Rate System of Hong Kong