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Hong Kong Dollar Touches Key Level for First Time Since 2005

  • HKMA says it will buy currency if there are bank requests
  • Currency has been weakening due to rate gap with U.S.
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Bloomberg’s Sofia Horta E Costa explains why Hong Kong’s dollar fell to the weak end of its permitted band.(Source: Bloomberg)
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Hong Kong’s dollar fell to the weak end of its permitted band for the first time since the range was imposed in 2005, a warning sign for a city where easy money has stoked a property boom and underpinned the stock market’s record rally.

The spot rate reached HK$7.85 per dollar on Thursday, after threatening to do so since late March. The Hong Kong Monetary Authority, which is obligated to defend the band, said in a statement that it stands ready to fulfill any requests from banks to support the currency.