HKD - Hong Kong Dollar

Overview of the Hong Kong Dollar (HKD)

Hong Kong is a Special Administrative Region of the People's Republic of China, located in the southeastern part of China. This is the most densely populated territory in the world, with a population of approximately 7.4 million people and a land area of 1,104 km².This is the most densely populated territory in the world with a population of about 7.4 million people and an area of 1,104 km². The official currency of this territory is the Hong Kong Dollar, symbolized as HK$, with the international code HKD.

The official currency of this territory is the Hong Kong Dollar, symbolized as HK$, with the international code HKD. 

The Hong Kong Monetary Authority also serves as the central bank managing the Hong Kong dollar. In addition, this currency is also issued by three other commercial banks: HSBC, Bank of China (Hong Kong), and Standard Chartered (Hong Kong), with banknotes in denominations of HK$20, HK$50, HK$100, HK$500, and HK$1000. In addition, the HKD banknotes with denominations of HK$10 and all coins are issued by the Hong Kong government.

The Hong Kong dollar is a high-value currency, ranked 13th in popularity on the global foreign exchange market (April 2016). The Hong Kong Dollar is not only used in Hong Kong but also in the Macao Special Administrative Region. The Macanese Pataca - the currency unit of Macau - is also pegged to the value of the Hong Kong Dollar.

History of the Hong Kong Dollar (HKD)

• In 1841: Hong Kong became a free trade area, with no official currency for daily transactions, using various foreign currencies such as the Indian Rupee, 8 reales from Spain and Mexico, and Chinese coins.

• From 1825: Britain issued silver sterling coins applicable to all British colonies. The 8 reales coins from Spain and Mexico were still considered legal tender at this time, with an exchange rate of 4 shillings = 2 pence Sterling.

• In 1860: Britain ceased to influence the monetary situation in Hong Kong.

• In 1863: Britain issued a special currency for Hong Kong based on the dollar system.

• In 1866: Establishment of a local mint

• In 1870: Hong Kong switched to using the Japanese yen and issued coins.

• In the 1860s: The issuance of banknotes by British colonial banks with denominations under the name dollar became a legal means of payment in Hong Kong and other areas.

• In 1935: Hong Kong abandoned the silver standard and adopted a regulated floating exchange rate policy with the British pound.

• After World War II: The Hong Kong dollar was pegged to the British pound.

• In 1972: The Hong Kong dollar was pegged to the US dollar.

• From 1974 to 1983: A floating exchange rate system was implemented.

• In 1983: The Hong Kong dollar was pegged to the US dollar at an exchange rate of 7.8 HKD = 1 USD.

• In 1997: The currency board system continued when Hong Kong was handed back to China.

The Hong Kong Dollar (HKD) Denominations

Currently, the Hong Kong dollar is in circulation in two forms: coins and banknotes with the following denominations:

• Coins: 10 cents, 20 cents, 50 cents, 1 HKD, 2 HKD, 5 HKD, 10 HKD

• Banknotes: 10 HKD, 20 HKD, 50 HKD, 100 HKD, 500 HKD, 1000 HKD

Value of the Hong Kong Dollar (HKD)

• For Hong Kong: The Hong Kong dollar HKD is the foundation ensuring the stable development of the regional economy. The exchange rate system linked to the US dollar helps this currency maintain stability, creating convenience for investors and international trade. HKD is the primary means of payment, supporting daily transactions and also serving as a tool for implementing monetary policy.

• For the region and internationally: The HKD is an intermediary for financial and trade transactions, especially between mainland China and other countries. The HKD foreign exchange market is large and highly liquid, affirming Hong Kong's status as a global financial center. HKD is also a high-value currency and is held in reserve by many countries and international organizations. The stability of the HKD, along with its close ties to the Chinese economy, makes the Hong Kong dollar an important indicator of the economic health of the East Asian region.

History of the Hong Kong Dollar exchange rate (HKD/USD)

• 1863-1935: Hong Kong adopted the Silver Standard, with the silver dollar as legal tender.

• 1935-1972: Transitioned to the British Pound exchange system, implementing a fixed exchange rate of 1 Pound = 16 HKD (later adjusted to 14.55 HKD).

• 1972-1974: Fixed exchange rate against the US dollar, initial rate 1 USD = 5.65 HKD, later adjusted to 5.085 HKD.

• 1974-1983: Implementing a regulated floating exchange rate, the HKD/USD exchange rate fluctuated from 1 USD = 4.965 HKD to 9.6 HKD.

• 1983-1998: The exchange rate was pegged to the dollar: 1 USD = 7.8 HKD

• 1998-2005: Pegged to the dollar: 1 USD = 7.75 HKD HKD

• From 2005 onwards: The exchange rate is linked to the dollar, with a fluctuation range of 7.75-7.85 HKD/USD.

The exchange rate policy of the Hong Kong Dollar (HKD)

The Hong Kong dollar has a unique exchange rate system, implemented since 1983 with a fixed rate of 7.8 HKD = 1 USD. The Hong Kong Monetary Authority (HKMA) plays a role in controlling and regulating the supply and demand of HKD in the foreign exchange market to ensure the stability of the HKD exchange rate. The HKD is also supported by one of the largest foreign exchange reserves in the world.

• Discussions related to the HKD and RMB peg: Recently, there has been much debate about pegging the value of the HKD to the Renminbi instead of the US dollar, due to the increasing economic and financial ties between Hong Kong and mainland China. However, this transition poses many challenges as it requires a significantly larger amount of RMB assets compared to the current foreign exchange reserves of the Hong Kong Monetary Authority.

• HKMA affirms the current exchange rate regime: Despite the fluctuations of the RMB and the Chinese financial market raising concerns about the possibility of HKD being unpegged from USD, the Hong Kong Monetary Authority (HKMA) still asserts that it will defend the current USD-linked exchange rate regime.

It can be said that the Hong Kong dollar is an important currency in the global money market. To track the latest HKD exchange rate, don't forget to visit Gocuco regularly, where you can get real-time updates, making it convenient for financial investments and business!