The Hong Kong dollar fell to a new 33-year low on Thursday, inching closer to the lower end of the monetary authority's targeted trading band, as the interest rate gap between US dollar rates and its Hong Kong counterparts widened further. The former British colony pegs its currency to the greenback, and hence, its money market rates mirror that of its US counterparts. The Hong Kong dollar fell to a new 33-year low of 7.8467 per dollar.
Earlier on Thursday, the Hong Kong Monetary Authority (HKMA), the city's de facto central bank, raised the base rate charged through its overnight discount window by 25 basis points to 2.00 percent, following a rate increase by the US Federal Reserve.
HKMA Chief Executive Norman Chan told a news conference after the rate rise that Hong Kong's currency would very soon hit the low end of its trading band at 7.85 per dollar.
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