Hong Kong’s financial systems remain stable despite Fed rate hike, external uncertainties: HKMA

Hong Kong’s financial systems and money markets have continued to operate in an orderly and smooth manner, Eddie Yue, chief executive of the Hong Kong Monetary Authority (HKMA), said Thursday.

The HKMA will continue to closely monitor the market situation, with a view to maintaining the stability of Hong Kong’s financial and monetary systems, he said in a question and answer session on the HKMA website regarding the latest interest rate hikes by the US Federal Reserve and stock market volatility.

Yue said that as an international financial center, it is normal for Hong Kong to see capital inflows and outflows, and the market expects the United States to officially enter a rate hike cycle. of interest.

Hong Kong’s linked exchange rate system has been in place for nearly 40 years and has seen many economic and interest rate cycles, he said. The linked system ensures that the exchange rate of the Hong Kong dollar remains stable within a range of 7.75 to 7.85 Hong Kong dollars per US dollar.

Noting that Hong Kong’s financial markets have a strong and solid buffer and resilience against market shocks caused by external factors, Yue said local foreign exchange reserves accounted for 136% of gross domestic product (GDP). ) and that the capital adequacy ratio of the banking system was 20.4%. , both of which are 30% higher than those of the 2008 financial crisis.

Despite the developments in Ukraine, the Hong Kong dollar market has operated as usual in an orderly fashion, the Hong Kong dollar exchange rate is stable, no abnormal capital flows have been detected and there are no indications large-scale short selling or impact on the Hong Kong dollar, he said.

Although Hong Kong’s stock market has been fluctuating alongside the outside market, trading has remained smooth and normal, Yue said.

The chief executive said Hong Kong has strong risk monitoring, forecasting and early warning capabilities, and is able to prevent and respond to financial risks more effectively than ever.

The HKMA also maintains close communication and information exchange with other financial regulators in monitoring inter-market conditions to ensure financial security and stability, he added.

With strong fundamentals, Hong Kong has weathered storms and adversities in the past, and the HKMA has acquired sufficient capacity and experience to maintain financial and monetary stability in Hong Kong, Yue noted.

Hong Kong’s Hang Seng index gained more than 4% to open higher at 21,430.71 points on Thursday, continuing its rebound from a record low recorded earlier this trading week. ■

Shirlene J. Manley