The Hong Kong Dollar is the official currency of the Hong Kong Special Administrative Region of the People's Republic of China. Its currency code is HKD, and its symbol is HK$. The Hong Kong Monetary Authority (HKMA) is responsible for maintaining monetary and banking stability in Hong Kong.
Exchange rate regime:Floating
Hong Kong's Monetary Policy
The cornerstone of Hong Kong's monetary policy is the Linked Exchange Rate System, which was adopted in 1983. Under this system, the HKD is pegged to the US dollar (USD) at a rate of 7.80 HKD to 1 USD, with a fluctuation band from 7.75 to 7.85.
The HKMA ensures this stability by committing to convert HKD to USD (and vice versa) at the linked rate, adjusting the base rate to maintain the peg, and issuing or withdrawing HKD as necessary to preserve the currency board arrangement that underlies the system.
Key Features of HKD
The Hong Kong Dollar is divided into 100 cents. Coins come in denominations of 10 cents, 20 cents, 50 cents, 1 Dollar, 2 Dollars, 5 Dollars, and 10 Dollars. Banknotes are issued in denominations of 10, 20, 50, 100, 500, and 1,000 Dollars.
HKD banknotes feature different designs, including landmarks and notable figures, depending on the denomination and issuing bank. There are three commercial banks authorized to issue currency in Hong Kong: HSBC, Standard Chartered, and the Bank of China.
Financial experts regard the Hong Kong Dollar as a significant currency due to Hong Kong's status as an international financial hub. The linked exchange rate system has contributed to the city's economic stability by providing certainty for international businesses and investors.
However, some critics argue that the peg to the USD limits Hong Kong's monetary policy flexibility, tying it to US interest rates and monetary policy decisions. The city's economic cycles and the US's may not always align, potentially leading to economic challenges.
The HKMA is responsible for the regulation of the Hong Kong Dollar. It oversees the issuance of new notes and coins, maintains the linked exchange rate system, and ensures the stability and integrity of the monetary and financial systems in Hong Kong. It also supervises banks and promotes the stability and integrity of the financial system.
Key considerations to bear in mind
Payment instructions should contain the beneficiary's IBAN, name, and address.
Payment Processing Time
The time taken for a payment to reach the recipient's bank account can vary. Domestic transfers within Hong Kong are typically processed quickly, while international transfers may take a few business days. Consider the processing time when planning your payment to ensure timely delivery. The iBanFirst Payment Tracker can help you track those payments, and ensure a smooth and efficient payment experience.
Fees and Charges
Banks and financial institutions may apply fees and charges when processing international payments. These fees can vary, so it is advisable to check with your bank to understand the charges associated with your transaction. Check out iBanFirst’s Savings Calculator to estimate how much you could save on your next international payment.
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