The Hong Kong Dollar (HKD) has recently experienced a series of notable developments due to monetary policy actions and market interventions aimed at maintaining its stability. In September and October 2025, the Hong Kong Monetary Authority (HKMA) reduced its base interest rate twice by a total of 50 basis points, bringing it to 4.25%. These cuts were in direct alignment with corresponding reductions by the U.S. Federal Reserve, reflecting a broader trend affecting the region's monetary environment.
In addition to interest rate adjustments, the HKMA has engaged in significant foreign exchange market interventions, purchasing nearly HK$7.38 billion during July and August to support the HKD. These decisive actions were necessary to maintain the currency's peg amid fluctuating market conditions, particularly after the trigger of the weak-side Convertibility Undertaking in June, when HKMA sold US dollars amounting to HK$9.42 billion. Such measures have contributed to increased market liquidity, reflected in the recent decline of the Hong Kong Interbank Offered Rates (HIBOR) to near-zero levels.
Currently, the HKD to USD exchange rate stands at 0.1285, which is consistent with its 3-month average, having fluctuated within a narrow range of 0.1279 to 0.1287. In contrast, the HKD has seen stronger performances against other currencies; for instance, it's trading near 14-day highs against the EUR at 0.1114, which is 1.1% above the 3-month average. Additionally, the HKD to GBP exchange rate is currently at 0.0982, 2.1% higher than its average, and the HKD to JPY has reached 90-day highs at 20.24, marking a 4.5% increase over the 3-month average.
These developments suggest that the HKD could remain under pressure due to the persistent cuts in interest rates and the currency interventions by the HKMA, although its current trading levels indicate relative stability against major currency pairs. Going forward, analysts will continue to monitor both domestic and international monetary policy impacts, along with liquidity dynamics, to assess further implications for the HKD.
