HKD Exchange Rate
Ahh, Hong Kong: the name translates to “fragrant harbor.” What else do you really need to know?
What influences the USD/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.
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 United States enjoys substantial economic and social ties with Hong Kong. U.S. companies have a generally favorable view of Hong Kong's business environment, including its legal system and the free flow of information, low taxation, and infrastructure.”3
– U.S. Department of State
Despite being a small economy, coming in 39th in GDP, Hong Kong has been a launching pad for many global firms that wish to exit or enter China’s mainland. It has also been an important financial and trading hub within Asia.
The HKD is the 8th most traded world currency, and it’s also the 3rd most active currency throughout Asia. On the other hand, the USD is the world’s #1 most traded world currency by volume.
Hong Kong’s economy is dependent upon services, even though some manufacturing is still available there. Financial services, retail, and hospitality form the basis of Hong Kong’s workforce opportunities.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