The Hong Kong Dollar (HKD) continues to be influenced by recent monetary policy actions, particularly interest rate cuts implemented by the Hong Kong Monetary Authority (HKMA). On September 18 and October 30, 2025, the HKMA reduced its base interest rate twice by 25 basis points, aligning with similar actions taken by the U.S. Federal Reserve. These cuts have helped push Hong Kong Interbank Offered Rates (HIBOR) to nearly zero, resulting in greater market liquidity, which can affect the HKD's valuation.
In addition to the interest rate adjustments, the HKMA has engaged in several foreign exchange market interventions aimed at stabilizing the HKD. Interventions in July and August amounted to purchases of nearly HK$7.38 billion, indicating a concerted effort to bolster the currency amid ongoing pressures. This action, alongside a recent trigger of the weak-side Convertibility Undertaking in June, portrays an active stance from the HKMA to maintain the HKD’s peg to the USD.
Recent market analysis shows that the HKD has demonstrated resilience, especially against key currency pairs. The exchange rate to USD is currently near 90-day highs at 0.1287, just above its three-month average, maintaining a narrow trading range. Meanwhile, against the EUR, the HKD rate of 0.1111 rests slightly above its recent averages, while the rate against GBP at 0.097832 marks a notable increase. Notably, the HKD to JPY is also experiencing upward momentum, now trading at 19.83, reflecting a positive shift.
Analysts suggest that the ongoing interest rate cuts coupled with robust currency interventions may create short-term volatility but are supportive of maintaining the currency's position within its trading band. Consequently, businesses and individuals engaging in international transactions should remain vigilant of these developments, as they could influence pricing over the coming weeks.
