The Hong Kong Dollar (HKD)


A Brief History of the Hong Kong dollar (HKD)

When Hong Kong was established as a trading port in the 19th century, there was no official currency in circulation, but rather a variety of foreign currencies – the Indian rupee, Spanish dollars, Mexican pesos and Chinese coins.

In 1842 the British assumed control over Hong Kong and introduced Sterling coins in an attempt to make the Pound Sterling the official local currency. Unfortunately, this proved unpopular and foreign coins, particularly the Spanish coin, continued to be used.

In 1935 the Hong Kong dollar as a distinct unit of currency came into existence and, even although the Hong Kong dollar was temporarily suspended for the Japanese Yen during Japanese occupation in WWII, it was fully restored immediately after the war in 1945, pegged to the British Pound at a rate of 16 HKD to 1 GBP.

After 1972, the Hong Kong Dollar was pegged to the U.S. Dollar, initially at a rate of 5.65 HKD to 1 USD, but this soon fell to 5.085 HKD in 1973. The Hong Kong Dollar floated between 1974 and 1983, officially pegged at a rate of 7.8 HKD to the U.S. Dollar in October 1983. As a result of this peg, the Hong Kong Dollar has been relatively stable versus the U.S. Dollar over the last decade, typically trading between 7.82 and 7.75.

The Hong Kong dollar in the Global Foreign Exchange Market

The Hong Kong Dollar is the eighth most traded currency in the world accounting for 2-3% of the daily foreign exchange market.

The most popular Hong Kong dollar exchange rate is the USD to HKD rate. This pair is known as the Dollar Hong Kong.

Currently the HKD operates on a linked exchange rate regime meaning a bank can only issue a Hong Kong dollar if it has the equivalent amount of US dollars on deposit.

Fact Table:

Currency Name: The Hong Kong Dollar
Currency Code: HKD
Currency Symbol: $ or HK$
Central Bank: Hong Kong Monetary Authority
Countries Used In: Hong Kong
Major Unit: One Hong Kong Dollar
Minor Unit: One cent = 1/100 of one Hong Kong Dollar
Note Denominations: $10, $20, $50, $100, $150, $500 and $1,000
Coin Denominations: 10¢, 20¢, 50¢, $1, $2, $5 and $10

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