USD/HKD Forex Trading
USD/HKD Live Charts
Use our USD/HKD live chart to get the most up-to-date insight into the recent performance of this pair and other currency pairs used in forex trading. It can help you make informed decisions at home or on the go – no matter if you use the TickTrader desktop platform, web terminal, or mobile app. Our real-time chart includes the very latest price, historical data, and technical analysis tools to help guide your next trade.
What Is USD/HKD Trading?
USD/HKD FX trading refers to the exchange of the United States dollar against the Hong Kong dollar in the foreign exchange market. Traders engage in this market to speculate on the exchange rate between the two currencies.
The US dollar is the world's most widely used reserve currency and is the official currency of the United States. It plays a crucial role in international trade and finance, and its movements often have a significant impact on global financial markets.
The official currency of Hong Kong, a Special Administrative Region of China, is the Hong Kong dollar. Hong Kong is a major financial hub in Asia, and its currency is freely traded in the forex market.
The USD/HKD exchange rate represents how much one US dollar is worth in Hong Kong dollars. For example, if it is 7.75, it means one US dollar can be exchanged for 7.75 Hong Kong dollars.
When trading this pair, it’s vital to remember that the Hong Kong dollar is pegged to the US dollar within a narrow trading band, with the Hong Kong Monetary Authority (HKMA) intervening in the market when necessary to maintain the peg. As a result, movements in USD/HKD are influenced by this pegging arrangement.
USD/HKD Historical Performance
In 1983, in response to financial instability and to maintain the stability of the Hong Kong dollar, the government implemented the Linked Exchange Rate System. Under this system, the domestic currency was pegged to the United States dollar at a fixed rate of approximately 7.75.
To support the Linked Exchange Rate System, the government established the Currency Board in 1983, which is responsible for issuing notes and ensuring that they are fully backed by US dollars.
Over the years, the pegged rate has remained stable, with the HKMA actively intervening in the forex market when necessary to maintain the peg.
The Asian Financial Crisis in 1997-1998 tested the stability of the Linked Exchange Rate System. However, the HKMA's commitment to the peg and its strong foreign exchange reserves enabled it to defend the peg successfully.
The pair also faced challenges during global financial crises, such as the one in 2008. Again, the peg was upheld by the HKMA's interventions and robust financial measures.
Although the HKD is pegged, the pair experiences significant price volatility, providing traders with numerous trading opportunities.
Major Factors That Affect the USD/HKD Pair
The most significant factor affecting it is Hong Kong's Linked Exchange Rate System. The Hong Kong Monetary Authority intervenes in the market to maintain the peg.
Differences in interest rates between the jurisdictions can impact the attractiveness of holding USD or HKD. Higher interest rates in one relative to the other may lead to capital flows and affect the exchange rate.
Trade relationships between the jurisdictions, as well as their broader trade policies, can impact the pair. Trade tensions and changes in trade dynamics may affect investor confidence and currency flows.
Political events and developments in both jurisdictions can create volatility and impact investor sentiment towards the currencies. Geopolitical tensions and uncertainties may influence the rate.
Changes in global market sentiment and risk appetite can influence the demand for safe-haven currencies like the US dollar. During periods of uncertainty or market volatility, investors may seek refuge in USD, which can affect USD/HKD.
Speculative trading and overall market sentiment towards the USD and HKD can lead to short-term fluctuations. Trader perceptions and expectations about future currency movements can drive short-term price changes.
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