Hong Kong Dollar (HKD) 2025: Current Value, Usage, and Economic Impact

Suzanne is a seasoned content marketer, writer, and fact-checker with a Bachelor of Science in Finance from Bridgewater State University. She specializes in developing strategic financial content.

What Is the Hong Kong Dollar (HKD)?

The Hong Kong Dollar, abbreviated as HKD, is the official currency of Hong Kong and a key player among the world’s most actively traded currencies. It is also the currency used in Macau, where the local pataca is pegged to the HKD, reinforcing its regional significance.

Key Highlights

• The HKD is Hong Kong's official currency and a major global trading currency.
• It operates within a tightly controlled exchange rate band pegged to the US dollar, currently between HK$7.7500 and HK$7.7600 per USD.
• Ranked as the ninth most traded currency worldwide, the HKD’s peg to the USD limits its correlation with other currencies.
• First introduced in 1863, the Hong Kong Dollar has a rich history, including a brief suspension during World War II.

Understanding the Hong Kong Dollar in 2024

The Hong Kong Dollar is divided into 100 cents and is commonly denoted with the prefix HK$ to distinguish it from other dollar-based currencies. Hong Kong stands as a global financial hub with one of the world’s freest economies, making the HKD a vital currency in international finance.

Since its inception in 1863, the HKD has experienced various phases, including prohibition by the Japanese puppet government during World War II and reinstatement post-1945. Today, the Hong Kong Monetary Authority (HKMA) exclusively manages the issuance and regulation of the currency.

In 1972, the HKD was officially pegged to the US dollar at a rate of HK$5.65 per USD. This peg has evolved into a narrow trading band, currently maintained between HK$7.7500 and HK$7.8500 per USD. The HKMA actively intervenes when the HKD approaches these boundaries to ensure currency stability.

This linked exchange rate system has been in place since 1983, supported by over $450 billion USD in foreign reserves, enabling the HKMA to defend the peg effectively. A notable challenge to this system was the 1998 speculative attack led by George Soros.

As the ninth most traded currency globally, the HKD’s peg to the USD results in limited unique correlations with other currencies, highlighting its distinctive position in the foreign exchange market.

The Role of the Hong Kong Monetary Authority (HKMA)

Founded in 1993, the HKMA serves as Hong Kong’s central bank, tasked with controlling inflation and ensuring the stability of the HKD and the banking sector through prudent monetary policies.

A principal responsibility of the HKMA is sustaining currency stability via the linked exchange rate system, which maintains the HKD-USD exchange rate within a strict range. This system requires note-issuing banks to back new HKD issuance with equivalent USD deposits.

Insight

The HKMA holds one of the largest foreign currency reserves relative to its economy, strengthening its ability to maintain the currency peg.

Three authorized banks—the Hong Kong and Shanghai Banking Corporation Limited, Bank of China (Hong Kong) Limited, and Standard Chartered Bank (Hong Kong) Limited—are permitted to issue HKD banknotes under government regulation. All issued notes are backed by USD reserves held in the government’s exchange fund, ensuring financial stability and confidence in the currency.

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