HKD Exchange Rate
Ahh, Hong Kong: the name translates to “fragrant harbor.” What else do you really need to know?
What influences the GBP/HKD exchange rate?
The HKD, which is administered by the Hong Kong Monetary Authority, isn’t allowed to be traded freely. Instead, it’s pegged to the U.S. dollar, so that the HKD trades within a narrow band that ranges from 7.75 and 7.85 USD. Therefore, the value of the USD will have a strong effect on the HKD/GBP exchange rate.
As a result, the Hong Kong Monetary Authority will usually base interest rates on automatic mechanisms that allow for the stability of the USD/HDK exchange rate. As Bloomberg news reports, “The government “is fully committed to maintaining the linked exchange-rate system, which continues to serve Hong Kong well,” a spokeswoman for the authority said. “We see no need and have no intention to change the system.”1
However, there is strong speculation that the de-pegging may occur if the Chinese renminbi weakens.2 The HKD hovered at the bottom of the exchange rate bracket for the bulk of 2016 due in part to the substantial slowing of China’s economy.
“The UK-Hong Kong relationship, it is special, it has been going on for a long time. It’s going to continue to increase and expand.”
– Richard Graham, head of a British parliamentary committee on China relations
In 2015, the U.K. was Hong Kong’s 2nd biggest trading partner amongst the 28 EU member states, and Hong Kong’s 12th biggest trading partner on the planet.
The HKD was not always linked to the USD. The Royal Mint in London started issuing subsidiary currency that could be used in Hong Kong in 1863. It was not until 1972 that the HKD was pegged to the USD.
The U.K. rounds out the top 10 in the list of Hong Kong’s top export markets with jewellery, edible preparations and products, and printed matter being the largest categories. The UK is also 15th in the list of import sources for Hong Kong, with non-electric motors, platinum and silver, and jewellery being the top categories.3
In 2016, following Brexit, Richard Graham stated that he would prioritise strengthening the relations between Hong Kong and the U.K., potentially with a free-trade agreement.4
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Currency Name: Hong Kong Dollar
Currency Code: HKD
Currency Symbol: $
Central Bank: Hong Kong Monetary Authority
Countries Used In: Hong Kong
Major Unit: One Hong Kong Dollar
Minor Unit: One Cent
Note Denominations: $10, $20, $50, $100, $500, $1,000
Coin Denominations: 10¢, 20¢, 50¢, $1, $2, $5, $10