Hong Kong dollar

Updated 2026-10-24

Summary

The Hong Kong dollar (HKD) is the currency of the Hong Kong Special Administrative Region, run under the Linked Exchange Rate System (LERS), a currency board. The HKMA commits to sell HKD to licensed banks at 7.75 per US dollar (strong-side convertibility undertaking, CU) and to buy HKD from them at 7.85 (weak-side CU). Inside that 'Convertibility Zone' the rate floats on market flows. The Monetary Base is fully backed by US dollar assets held in the Exchange Fund, and changes in the base are matched by changes in those assets at the fixed rates (HKMA). At end-September 2026 the base was HK$2,090.2 billion against foreign assets of HK$3,576.0 billion (HKMA). Because HKD can be exchanged at the band edges, Hong Kong has no independent monetary policy: interbank rates (HIBOR) track US rates, plus local supply and demand. On 2026-09-17 the HKMA raised its Base Rate 25 basis points to 4.25% after the Fed lifted its target range to 3.75-4%. The HKD is 3.8% of global FX turnover (BIS, April 2025, up from 2.6% in 2022). It is not a crypto asset; since the Stablecoins Ordinance took effect on 2025-08-01, tokens that reference the HKD are a separate, licensed product.

Key numbers

Convertibility Zone (strong / weak CU): HK$7.75 / HK$7.85 per US$ (as of 2026-10-24). Source: hkma.gov.hk

Monetary Base: HK$2,090.2 billion (as of 2026-09-30). Source: hkma.gov.hk

Exchange Fund foreign assets: HK$3,576.0 billion (-HK$76.7 billion in September) (as of 2026-09-30). Source: hkma.gov.hk

Currency Board backing ratio: 112.00% (as of 2026-08-31). Source: info.gov.hk

Aggregate Balance: HK$54,125 million (as of 2026-10-23). Source: hkma.gov.hk

Overnight / 1-month HIBOR: 2.58% / 2.77893% (as of 2026-10-23). Source: hkma.gov.hk

HKMA Base Rate: 4.25% (Fed target range 3.75-4%) (as of 2026-09-17). Source: hkma.gov.hk

HKD per USD, month-end spot: 7.8470 (as of 2026-09-30). Source: hkma.gov.hk

Trading range, March-August 2026: 7.8080-7.8471; CUs not triggered (as of 2026-08-31). Source: hkma.gov.hk

Southbound Stock Connect net purchases: HK$214.7 billion (end-Feb to end-Aug 2026) (as of 2026-08-31). Source: hkma.gov.hk

Share of global FX turnover: 3.8% (2.6% in 2022) (as of 2025-04-30). Source: bis.org

Real GDP growth: 4.3% y/y in Q2 2026; 2026 forecast 3.5%-4.5% (as of 2026-08-14). Source: info.gov.hk

Timeline

2026-10-23 — HKMA daily statistics: Aggregate Balance HK$54,125 million, overnight HIBOR 2.58%, one-month 2.779%. (Source: hkma.gov.hk)

2026-10-14 — Exchange Fund accounts for end-September: Monetary Base HK$2,090.2 billion, foreign assets HK$3,576.0 billion (-HK$76.7 billion). (Source: hkma.gov.hk)

2026-09-30 — Currency Board Account at end-August: backing ratio 112.00%. (Source: info.gov.hk)

2026-09-17 — HKMA raises the Base Rate 25 bp to 4.25% after the Fed's hike; Yue says carry trades may ease the HKD gradually. (Source: hkma.gov.hk)

2026-08-31 — HKMA September half-yearly report (review period to end-August): HKD 7.8080-7.8471 March-August, CUs not triggered, Aggregate Balance about HK$54.2 billion. (Source: hkma.gov.hk)

2026-08-14 — HKSAR Q2 review: GDP +4.3% y/y, 2026 forecast raised to 3.5%-4.5%. (Source: info.gov.hk)

2026-08-07 — Record of 2026-07-02 Currency Board Sub-Committee published: CUs not triggered, Aggregate Balance about HK$54 billion. (Source: hkma.gov.hk)

2026-04-10 — HKMA grants the first stablecoin issuer licences; Standard Chartered-backed Anchorpoint is one (the AA draft reports HSBC as the other; HKMA page not read). (Source: sc.com)

2026-02-28 — HKMA March half-yearly report (review period to end-February): HKD 7.7673-7.8251 from September 2025 to February 2026, CUs not triggered. (Source: hkma.gov.hk)

2025-11-13 — HKMA announces the EnsembleTX pilot for real-value tokenised deposits, settled in HKD RTGS. (Source: info.gov.hk)

2025-09-30 — BIS Triennial Survey: HKD 3.8% of global FX turnover; Hong Kong the fourth-largest FX centre. (Source: hkma.gov.hk)

2025-08-01 — Stablecoins Ordinance takes effect (per Standard Chartered release). (Source: sc.com)

2025-07-11 — Weak-side CU triggered again; Aggregate Balance falls to about HK$101.2 billion. (Source: hkma.gov.hk)

2025-06-26 — First weak-side CU trigger since May 2023: HKMA buys HK$9.42 billion; Aggregate Balance to HK$164.1 billion. (Source: hkma.gov.hk)

2025-05-31 — (May 2025) Strong-side triggers add HK$129.4 billion; Aggregate Balance above HK$170 billion; overnight HIBOR falls to 0.03% by end-May. (Source: hkma.gov.hk)

Key actors and links

China, Hong Kong Special Administrative Region (country:china-hong-kong-special-administrative-region): The HKD is the currency of Hong Kong; the HKMA, an agency of its government, runs the LERS and the Exchange Fund.

US dollar (asset:usd): The anchor: the Monetary Base is backed by US dollar assets and the HKD is convertible at 7.75-7.85 per US dollar.

Federal Reserve (actor:federal-reserve): Fed moves set the US side of the rate gap; the HKMA raised its Base Rate to 4.25% on 2026-09-17 after the Fed's hike to 3.75-4%.

Chinese renminbi (asset:cny): Mainland capital flows (Southbound Connect HK$214.7 billion; CNH deposits RMB1,345.2 billion) are a main driver of HKD demand; Hong Kong is the top offshore RMB FX centre.

China (country:china): Inference (AA): mainland investors, IPO pipelines and policy shape HKD demand; the HKMA reports Southbound flows as the main exchange-rate driver.

People’s Bank of China (actor:peoples-bank-of-china): Inference (AA): PBOC policy sets onshore rates and the CNH link; no PBOC role in the LERS is stated in the sources read.

BIS (actor:bis): The BIS Triennial Survey gives the HKD's 3.8% FX-turnover share and Hong Kong's rank as an FX centre.

Stablecoins (theme:stablecoins): Licensed HKD-referenced stablecoins have been possible since the Stablecoins Ordinance took effect on 2025-08-01; the first licences were granted on 2026-04-10.

Stablecoin settlement volumes (indicator:stablecoin-supply): HKD stablecoin circulation (unverified RedCoin figure of HK$80.7 million in the AA draft) is tiny against the HK$2,090.2 billion base.

Tokenized deposits (theme:tokenized-deposits): Project Ensemble's 2026 pilot settles tokenised bank deposits via the HKD RTGS system, moving towards tokenised central bank money.

Tokenized money (theme:tokenized-money): HKD stablecoins and tokenised deposits are two competing forms of tokenised HKD, with different legal claims.

Interest rates (indicator:interest-rates): HIBOR tracks US rates plus local supply and demand; overnight HIBOR was 2.58% against a 4.25% Base Rate on 2026-10-23.

Dollar strength (indicator:dollar-strength): Inference (AA): because the HKD is tied to the dollar within 7.75-7.85, a stronger dollar exports tighter US conditions to Hong Kong, and weakness vs the CNY follows the dollar.

Regulated intermediaries (theme:regulated-intermediaries): Licensed banks hold the CU rights and issue HKD stablecoins; the licensing regime keeps token issuance inside regulated institutions.

Why it matters now

The peg is back under mechanical stress from the rate gap. In May 2025 strong-side triggers added HK$129.4 billion of liquidity and pushed overnight HIBOR from about 4.30% to 0.03%, while the US rate stayed near 4.35%. Carry trades (sell HKD, hold USD) then pushed the rate to 7.85, and the HKMA bought HKD in several weak-side triggers from 2025-06-26 (HK$9.42 billion that day), cutting the Aggregate Balance from over HK$170 billion to about HK$101 billion by 2025-07-11 (HKMA). By 2026 the balance had settled near HK$54 billion (HK$54,125 million on 2026-10-23) and the HKMA's September report said the CUs were not triggered from March to August 2026, with the rate between 7.8080 and 7.8471. The month-end September 2026 spot was 7.8470, near the weak edge (HKMA data page). On 2026-09-17 HKMA chief executive Eddie Yue said the rate gap 'will widen' and carry trades 'may cause the Hong Kong dollar to gradually ease'. Overnight HIBOR was 2.58% and one-month HIBOR 2.78% on 2026-10-23, below the 4.25% Base Rate (HKMA). Foreign assets fell HK$41.8 billion in August and HK$76.7 billion in September 2026. The HKMA releases do not attribute those falls; the Exchange Fund also holds non-peg assets, so AA does not equate them with intervention.

The second thread is regulated HKD-referenced tokens. The HKMA granted the first two stablecoin issuer licences on 2026-04-10, one to Standard Chartered-backed Anchorpoint. The AA draft reports HSBC as the other, with a RedCoin launch on 2026-10-23; AA could not re-read HSBC's pages, so figures are UNKNOWN here. Policy-side, the HKMA's Project Ensemble pilot runs in 2026 to settle tokenised deposits in HKD through the RTGS system.

Risks and open questions

Bull case: The LERS is working as designed. The HKMA bought HKD in mid-2025 and let the Aggregate Balance fall from over HK$170 billion to about HK$54 billion, which is the 'equilibrium' it described; since then the rate has stayed inside the band for months (7.8080-7.8471 March-August 2026, CUs not triggered) with the base 112% backed on the HKMA's currency-board account. The economy is growing (GDP +4.3% in Q2, forecast 3.5%-4.5%), mainland capital keeps arriving (Southbound purchases of HK$214.7 billion in six months, CNH deposits up 22.7% since end-2025), and IPOs raised HK$210.2 billion in H1. Inference (AA): if the Fed holds near 3.75-4% and HIBOR drifts up as liquidity stays at about HK$54 billion, carry pressure fades without further HKMA action, and the new stablecoin and tokenised-deposit rails add use cases for the currency rather than a threat to it.

Bear case: The rate gap is widening again just as the rate sits at 7.847. Overnight HIBOR of 2.58% is far below the 4.25% Base Rate and the Fed's 3.75-4% target range, the HKMA itself says carry trades may weaken the HKD, and foreign assets fell HK$76.7 billion in September (cause not stated). If the weak-side CU triggers repeatedly, the Aggregate Balance (about HK$54 billion) leaves little room before HIBOR must jump, which would hit mortgages, equity valuations and IPO funding. Inference (AA): a Fed that keeps hiking to fight energy inflation would stretch the gap further, while an AI-export-led boom, Middle East shocks or mainland capital controls could reverse the Southbound flows that have supported the HKD. A stablecoin run, or leakage of HKD into foreign-issued tokens, is a smaller but untested risk: the HKMA has not published data on how licensed-issuer reserves would behave under stress.

Falsifiers: - Weak-side CU triggers that drain the Aggregate Balance (HK$54,125 million on 2026-10-23) with no rise in HIBOR would falsify the claim that the LERS adjusts through interbank rates. - A change to the 7.75-7.85 zone, or a backing ratio (112.00% at end-August 2026) falling toward 100%, would falsify the assumption of a stable currency-board framework. - Evidence that the HK$76.7 billion September fall in foreign assets reflects peg defence beyond what the Aggregate Balance shows would change the reading of current stress. - Licensed HKD stablecoin circulation growing to a visible fraction of the HK$2,090 billion base would falsify the view that tokenised HKD stays marginal. - Credible disagreement: the HKMA says carry pressure may persist as the rate gap widens; others may expect it to fade as US rates plateau. AA does not resolve it.

Value accrual gate: Not a crypto asset: the HKD is a fiat currency. The mechanism's winners are holders of USD-linked assets who borrow cheap HKD (carry traders), banks that earn spread on the Base Rate, and the HKMA, whose Exchange Fund earns on the foreign assets backing the base. Losers are HKD borrowers if HIBOR jumps after weak-side intervention. HKD stablecoin issuers (licensed banks) gain deposit-like float without paying interest if tokens are held as payment balances; token holders have no yield by regulation. No blockchain token is required for HKD to function, so the node implies no demand for any public chain's native token.

What to watch

Exchange Fund Abridged Balance Sheet and Currency Board Account (end-September data). (2026-10-30); Source: hkma.gov.hk

Any weak-side CU trigger at 7.85 and the resulting fall in the Aggregate Balance (HK$54,125 million on 2026-10-23). (unscheduled; spot was 7.8470 at end-September); Source: hkma.gov.hk

Next Fed policy decision and HKMA Base Rate response. (late October to mid-December 2026 (date not verified)); speculative, no scheduled source

Hong Kong Q3 2026 GDP advance estimate (Census & Statistics Department). (around end-October to mid-November 2026 (date not verified)); speculative, no scheduled source

Analytical Accounts of the Exchange Fund for October 2026 (foreign assets, Monetary Base). (mid-November 2026 (date not verified)); Source: hkma.gov.hk

HKD stablecoin circulation and reserve disclosures from licensed issuers, and further licences. (ongoing; RedCoin attestation due after Q4 2026 (AA draft)); speculative, no scheduled source

EnsembleTX pilot upgrade towards tokenised central bank money settlement. (through 2026 (staged; no date given)); Source: info.gov.hk

HKMA March 2027 half-yearly report on CU triggers and interbank conditions. (March 2027 (inferred from the 2026 pattern)); Source: hkma.gov.hk

AA inference

Inference (AA): the HKD is the graph's cleanest rules-based currency: its price is set by the band edges, the Aggregate Balance and the rate gap. When HIBOR sits below US rates, carry selling pushes the rate to 7.85, the HKMA buys HKD, liquidity shrinks and HIBOR rises until the gap closes. That ties it to the Fed (the Base Rate follows), to mainland flows (Southbound purchases of HK$214.7 billion in six months) and to the renminbi. For tokenization themes, licensed HKD stablecoins are small claims on a base of HK$2,090 billion: RedCoin's unverified HK$80.7 million would be about 0.004% of it (AA arithmetic). The thesis weakens if weak-side triggers recur without HIBOR adjusting.

Sources

HKMA describes a Convertibility Zone of 7.75 to 7.85 HKD per USD: it sells HKD to banks at the strong-side CU of 7.75 and buys HKD from banks at the weak-side CU of 7.85. The Monetary Base is fully backed by US dollar assets held in the Exchange Fund, and changes in the base are matched by corresponding changes in those assets at the fixed rate. (Source: hkma.gov.hk, accessed 2026-10-24)

Exchange Fund analytical accounts at end-September 2026 (released 2026-10-14): foreign assets HK$3,576.0 billion (down HK$76.7 billion in the month), Monetary Base HK$2,090.2 billion, claims on the private sector in Hong Kong HK$473.0 billion, foreign liabilities HK$135.3 billion. (Source: hkma.gov.hk, accessed 2026-10-24)

Exchange Fund analytical accounts at end-August 2026 (released 2026-09-14): foreign assets HK$3,652.7 billion (down HK$41.8 billion in the month), Monetary Base HK$2,080.2 billion. (Source: info.gov.hk, accessed 2026-10-24)

Currency Board Account at 2026-08-31 (released 2026-09-30): Monetary Base HK$2,080.2 billion, backing assets HK$2,329.9 billion, backing ratio 112.00% (111.86% at end-July). Exchange Fund total assets were HK$4,335.4 billion, down HK$68.3 billion from end-July. (Source: info.gov.hk, accessed 2026-10-24)

HKMA Daily Monetary Statistics for 2026-10-23: closing Aggregate Balance HK$54,125 million; overnight HIBOR 2.58%; one-month HIBOR 2.77893% (HKAB fixing); the page's currency-board operations showed no activity that day per the page; the CU levels shown are 7.75 and 7.85. (Source: hkma.gov.hk, accessed 2026-10-24)

HKMA Economic & Financial Data page: HKD/USD end-September 2026 spot HK$7.8470 per US dollar (HK$7.8390 in August), interbank spot 7.8455, and Base Rate 4.25% (4.00% previously). (Source: hkma.gov.hk, accessed 2026-10-24)

On 2026-09-17 HKMA Chief Executive Eddie Yue said the Base Rate rose 25 basis points to 4.25% with immediate effect, matching the Fed's hike to a 3.75-4% target range; he said the HKD-USD interest rate differential will widen and carry trade activities may cause the Hong Kong dollar to gradually ease. (Source: hkma.gov.hk, accessed 2026-10-24)

HKMA September 2026 half-yearly report (review March-August 2026): the HKD traded between 7.8080 and 7.8471 per USD; CUs were not triggered; Aggregate Balance largely unchanged at about HK$54.2 billion at end-August; Monetary Base HK$2,080.3 billion; carry trade activity, encouraged by HKD rates below USD rates, later pushed the HKD weaker; Southbound Stock Connect net purchases were HK$214.7 billion from end-February to end-August; total deposits rose 5.8% in the first seven months; IPOs raised HK$210.2 billion in H1; CNH deposits and CDs reached RMB1,345.2 billion at end-July. (Source: hkma.gov.hk, accessed 2026-10-24)

HKMA March 2026 half-yearly report (review end-August 2025 to end-February 2026): HKD traded between 7.7673 and 7.8251, moving from the strong to the weaker side; CUs not triggered; Aggregate Balance HK$54.0 billion and Monetary Base HK$2,071.6 billion at end-February 2026. (Source: hkma.gov.hk, accessed 2026-10-24)

Currency Board Sub-Committee meeting of 2026-07-02 (review 2026-04-23 to 2026-06-22): HKD traded 7.8289-7.8397; Aggregate Balance stable at about HK$54 billion; CUs not triggered; Monetary Base rose to HK$2,072.94 billion with all changes matched by foreign reserves. (Source: hkma.gov.hk, accessed 2026-10-24)

HKMA, 2025-06-26: weak-side CU triggered for the first time since May 2023; the HKMA bought HK$9.42 billion; Aggregate Balance fell to HK$164.1 billion on 2025-06-27. Earlier strong-side triggers in May brought in HK$129.4 billion. The HKMA said the weak-side CU could trigger again and that falling balances should push HKD interbank rates up. (Source: hkma.gov.hk, accessed 2026-10-24)

HKMA inSight, 2025-07-11: Aggregate Balance rose from about HK$45 billion to over HK$170 billion in early May 2025; overnight HIBOR fell from about 4.30% to 0.03% by end-May while the US overnight rate stayed near 4.35%; a weak-side trigger before dawn on 2025-07-11 cut the Aggregate Balance to about HK$101.2 billion; the LERS 'does not target interest rate in itself'. (Source: hkma.gov.hk, accessed 2026-10-24)

Standard Chartered, 2026-04-10: Anchorpoint Financial, a joint venture of Standard Chartered Bank (Hong Kong), HKT and Animoca Brands formed in February 2025, was granted a stablecoin issuer licence by the HKMA under the Stablecoins Ordinance, which took effect on 1 August 2025. (Source: sc.com, accessed 2026-10-24)

BIS Triennial Survey April 2025: the Hong Kong dollar was 3.8% of global OTC FX turnover (2.6% in 2022). HKMA: Hong Kong's average daily FX turnover was US$883.1 billion in April 2025, up 27.2% from April 2022, and Hong Kong was the fourth-largest global FX centre. (Source: bis.org, accessed 2026-10-24)

HKMA press release 2025-09-30 on the BIS survey: Hong Kong average daily FX turnover US$883.1 billion in April 2025 (fourth largest centre); renminbi FX US$315.1 billion a day, with Hong Kong the top offshore RMB FX centre. (Source: hkma.gov.hk, accessed 2026-10-24)

Hong Kong real GDP grew 4.3% year on year in Q2 2026 (5.9% in Q1; 5.1% in H1); the full-year 2026 forecast was raised to 3.5%-4.5%; underlying consumer price inflation is forecast at 2.5% for 2026; unemployment was 3.7%. (Source: info.gov.hk, accessed 2026-10-24)

HKMA Project Ensemble, 2025-11-13: the EnsembleTX pilot for real-value tokenised-deposit transactions runs throughout 2026; interbank settlement of tokenised deposits initially runs through the HKD RTGS system, with staged upgrades towards 24-hour settlement in tokenised central bank money. (Source: info.gov.hk, accessed 2026-10-24)