USD/SGD and USD/INR: what are you watching?
Singapore manages its currency through the exchange rate itself; India manages the rupee more tightly. Two managed floats, two very different trades.
Post:
- which pair you follow and why
- the policy signals that matter
- how managed floats behave differently from free ones
Background: the Hong Kong dollar peg for the managed-rate family.
Background: The Hong Kong dollar peg explained: how the 7.75–7.85 band works
Hong Kong has linked its currency to the US dollar since 1983. How the Linked Exchange Rate System keeps USD/HKD between 7.75 and 7.85, and which other currency pegs traders should know.
What is the Hong Kong dollar peg?
Under the Linked Exchange Rate System, in place since 17 October 1983, the Hong Kong Monetary Authority keeps the Hong Kong dollar between HK$7.75 and HK$7.85 per US dollar.
What happens when USD/HKD reaches 7.85?
The HKMA buys Hong Kong dollars from banks with US dollars under its weak-side Convertibility Undertaking. That reduces Hong Kong dollar liquidity, which tends to push local interest rates up and support the currency.
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