Outlook
The HKD is expected to remain anchored to the USD within the 7.75–7.85 per USD peg, with HKDUSD trading near 0.1280 per HKD and within a tight range around 0.1280–0.1287. Markets anticipate ongoing liquidity management by the HKMA to support the peg, with the near term direction influenced by the US rate path. If liquidity remains tight and the US dollar strengthens, the HKD could firm toward the stronger end of the peg; if liquidity eases and US yields retreat, the HKD could drift toward the weaker end.
Key drivers
- Peg maintenance and liquidity management: HKMA actions in mid-2025 to defend the 7.75–7.85 band have kept the HKD tethered but ongoing liquidity operations remain a key influence.
- Interbank rate dynamics: interventions have caused fluctuations in HIBOR, shaping short‑term funding costs and currency sentiment.
- Carry trades and reversals: carry trades that profited from HKD liquidity pressures evolved as actions tightened HKD liquidity, contributing to shifts in demand for the currency.
- Stock connect inflows: record August 2025 inflows supported HKD demand through equity-linked channels, reinforcing the currency in the near term.
Range
HKDUSD 0.1280–0.1287; HKDEUR 0.1065–0.1120; HKDGBP 0.092640–0.098805; HKDJPY 19.52–20.40.
What could change it
- HKMA policy stance: any new interventions or liquidity measures could widen or tighten the peg band’s effective range.
- US rate path and dollar strength: shifts in US monetary policy or dollar strength would feed through to HKD dynamics.
- Capital flows and market sentiment: changes in stock connect inflows/outflows, carry-trade dynamics, or mainland capital movements could alter HKD demand.
- External shocks and domestic risk factors: macro data, property-market signals, or geopolitical events could impact risk appetite and HKD liquidity conditions.
