Hong Kong has seen weak demand and capital outflows in recent months, as expected, since the US raised interest rates repeatedly this year, Chan wrote. The Hong Kong Monetary Authority has undertaken more than HK$170 billion (US$21.7 billion; $30 billion) in sell orders as of July 22, with the banking system balance falling to about HK$165 billion as a result, he said.
Hong Kong’s “huge” foreign exchange reserves, about US$440 billion ($610.6 billion), are enough to maintain the linked exchange rate system with the US dollar even as America’s rising interest rates lead to capital outflows, according to Financial Secretary Paul Chan.
Chan is the latest official to address the strength of the city’s reserves after Hayman Capital Management’s Kyle Bass wrote on Twitter a few days ago that the central bank’s reserves to defend the Hong Kong dollar were falling because of recent interventions to prop up its value. Bass claimed the reserves could be exhausted by the end of next month.
