Wise gives you the real, mid-market, exchange rate, so you can make huge savings on your international money transfers. Financially, the currency peg was designed not to require the Bank of England to lend its reserves to maintain Hong Kong’s currency peg. Three commercial banks are licensed by the Hong Kong Monetary Authority to issue their own banknotes for general circulation in Hong Kong. These banks, HSBC, Bank of China, and Standard Chartered, issue their own designs of banknotes in denominations of HK$20, HK$50, HK$100, HK$150, HK$500, and HK$1000, with all designs being similar to one another in the same denomination of banknote.
- The HKD is used in both Hong Kong and the neighboring territory of Macau, whose currency, the pataca, is pegged to the Hong Kong dollar.
- In 1972, the HK dollar was pegged to the U.S. dollar at a rate of HK$5.65 to $1 USD.
- The funds for the backing are held in Hong Kong’s exchange fund, one of the world’s largest government reserves.
- The issue of Hong Kong dollar notes is governed today by the Hong Kong Monetary Authority (HKMA), the governmental currency board of Hong Kong.
You can send a variety of international currencies to multiple countries reliably, quickly, and safely, and at a rate cheaper than most banks. In 1975, the HK$5 notes were replaced by coins, whilst HK$1,000 notes were introduced white label payment gateway reseller in 1977. The Mercantile Bank was absorbed by the HSBC in 1978 and ceased issuing notes. In 1985, HK$20 notes were introduced, whilst, in 1993, HK$10 coins were introduced and the banks stopped issuing HK$10 notes.
The Hong Kong dollar has been pegged to a narrow trading band, which currently ranges between HK$7.7500 and HK$7.8500 per USD. If, and when, the HKD hits either the upper or lower bound, the HKMA, which acts as the de facto central bank, intervenes to stabilize the currency. Banks often advertise free or low-cost transfers, but add a hidden markup to the exchange rate.
The issue of Hong Kong dollar notes is governed today by the Hong Kong Monetary Authority (HKMA), the governmental currency board of Hong Kong. Under licence from the HKMA, three commercial banks issue their own banknotes for general circulation in the region. They are Hongkong and Shanghai Banking Corporation Limited; the Bank of China (Hong Kong) Limited; and the Standard Chartered Bank (Hong Kong) Limited. In most countries of the world the issue of banknotes is handled exclusively by a single central bank or government. The arrangements in Hong Kong are unusual but not unique; a comparable system is used in the United Kingdom, where seven banks issue banknotes.
The peg of the HKD to the U.S. dollar in 1983 took place as part of Sino-British negotiations on Hong Kong’s status after 1997. With the pound depreciation, the peg between HKD and the pound was broken in 1967. The concept of an HKD as a unique currency unit was born during this period. The Chinese did not warmly receive the new HKD, which resembled those of Spain and Mexico. Live tracking and notifications + flexible delivery and payment options.
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Banknotes, which are denominated in dollars, of the new British colonial banks, the Hong Kong and Shanghai Banking Corporation, and the Chartered Bank of India, Australia, and China began to circulate in Hong Kong and the broader region in the 1860s. Established in 1993, the Hong Kong Monetary Authority is the central bank of the island and acts to control inflation and maintain the stability of the Hong Kong dollar (HKD) and of the banking sector through its monetary policy. The U.S. dollar is the currency most used in international transactions. Several countries use the U.S. dollar as their official currency, and many others allow it to be used in a de facto capacity.
The currency code for Dollars is HKD, and the currency symbol is $. Below, you’ll find Hong Kong Dollar rates and a currency converter. They add hidden markups to their exchange rates – charging you more without your knowledge. Commemorative banknotes have also been issued celebrating the note-issuing banks’ anniversaries as well as the Olympic Games held in Beijing in 2008 and 2022. In 1863, 1-mil (1⁄10-cent), 1-cent and 10-cent coins were introduced, followed in 1866 by 5-cent and 20-cents, half-dollar and 1-dollar. The 1-mil and 1-cent were struck in bronze, with the 1 mil a holed coin.
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In 1863, London’s Royal Mint began issuing Hong Kong Dollar coins. By 1935, Hong Kong was the only country left on the silver standard. During Japanese occupation the Dollar was temporarily suspended, replaced by the Japanese Military https://traderoom.info/ Yen. In 1945, the Hong Kong was re-issued, pegged to the British Pound at a rate of 16 HKD to 1 GBP. In 1972, the Hong Kong Dollar re-pegged to the US Dollar, with the rate changing multiple times over the next few decades.
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Banknotes are then run through a government exchange fund that holds U.S. dollars in reserves and records all transactions in the general accounts of the two currencies. Under capital control laws, a bank can only use HK dollars if it has the equivalent value of U.S. dollars on deposit. However, banknotes were not produced until the 1860s, when the Oriental Bank, the Chartered Bank of India, Australia and China and the Hong Kong and Shanghai Banking Corporation began issuing notes. Denominations issued in the 1860s and 1870s included 1, 5, 10, 25, 50, 100 and 500 dollars.
One of the key roles of the HKMA is maintaining currency stability. The linked exchange rate system is designed to stabilize the exchange rate between the Hong Kong dollar (HKD) and the United States dollar (USD). The fixed exchange rate system seeks to maintain parity with the USD within a tight range, allowing HKD note-issuing banks to issue new banknotes only when they deposit an equivalent value of U.S. dollars with the authority. When Hong Kong was established as a free trading port in 1841, there was no local currency in everyday circulation.
However, the HK$10 banknote and all coins are issued by the Government of Hong Kong. Only a bank with the equivalent in U.S. dollars on deposit can issue a Hong Kong dollar. Thanks to the currency board system, Hong Kong’s whole monetary base is backed by U.S. dollars.
Our smart tech means we’re more efficient – which means you get a great rate. These notes were printed in paper in 2002 and in polymer since 2007. All older HK$10 banknotes, although rare and being phased out, remain legal tender. The most common HKD notes are $10, $20, $50, $100, $500, and $1,000. The three note-issuing banks issue $20, $50, $100, $500, and $1,000 bills.
The HKMA holds one of the world’s largest currency reserves in relation to its economy. The Xe Rate Alerts will let you know when the rate you need is triggered on your selected currency pairs. Wise is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011, Firm Reference , for the issuing of electronic money. There is a reasonable chance that in the long term, the HKD will no longer be relevant, and could even become extinct. Eventually, there may come a point when the currency control over the Chinese Yuan is lifted or loosened significantly, and at such a time, the HKD will have no future key role to play. Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
The majority of trades using the HKD are therefore solely for business transactions, or as part of a carry trade. The Hong Kong Dollar has a low interest rate at present, and this makes it an appealing currency for carry traders. It is possible to borrow Hong Kong Dollars cheaply and then use the money to buy a higher yielding debt in a country such as New Zealand or Australia. The fixed exchange rate between the Hong Kong dollar and the U.S. dollar is 7.80 HK$ for 1 US$. In response to market speculation, the Hong Kong Monetary Authority announced on January 27 that the HKD’s linked exchange rate regime would be protected. Banks and traditional providers often have extra costs, which they pass to you by marking up the exchange rate.