HKD

The Hong Kong dollar (HKD) is the official currency of Hong Kong. It is abbreviated as HKD and often denoted by the symbol HK$, commonly used in everyday transactions within Hong Kong. The currency is widely accepted in the territory and is freely convertible to other currencies.

Issuance and governance: Banknotes are issued under the Currency Ordinance by three note-issuing banks: Bank of China (Hong Kong) Limited, The Hongkong and Shanghai Banking Corporation Limited, and Standard Chartered Bank (Hong Kong) Limited. Coins are issued by the Hong Kong Government under the authority of the Hong Kong Monetary Authority (HKMA). The HKMA is the umbrella authority responsible for monetary stability, the currency board arrangement, banking regulation, and the development of financial infrastructure.

Exchange rate framework: The HKD operates under a linked exchange rate system pegged to the United States dollar. Since the early 1980s, the HKD has traded within a narrow band around 7.75 to 7.85 HKD per USD, with a central parity near 7.80. The HKMA uses foreign exchange reserves to defend the peg and may intervene in the foreign exchange market as needed. Domestic interest rates generally move in line with U.S. monetary policy.

History and usage: Historically, notes were issued by private banks before the modern system was established. The current framework, supervised by the HKMA, emphasizes monetary stability and currency convertibility. The HKD is the primary medium of exchange in Hong Kong and is also widely used in cross-border trade and financial markets in the region.