The Hong Kong Monetary Authority published its Currency Board Operations Report for the period from April 23 to June 22, 2026, on August 7. The Hong Kong Currency Board Committee was informed that the HKD/USD exchange rate traded within a range of 7.8289 to 7.8397 during the reporting period.
The Hong Kong dollar exchange rate remained broadly stable, with fluctuations primarily driven by capital flows linked to southbound Stock Connect trading and other capital market activities. Under the Linked Exchange Rate system, HKD interbank interest rates largely followed the trend of USD interest rates, while also being influenced by local HKD fund supply and demand dynamics.
During the period, overnight HKD interbank interest rates occasionally rose, reflecting month-end and capital market-related funding needs, while longer-term HKD interbank rates increased slightly. The Convertibility Undertaking was not triggered during the reporting period, and the Aggregate Balance remained stable at approximately HKD 54 billion. Usage of the Discount Window was normal. Overall, trading in the HKD foreign exchange and interbank markets continued to operate smoothly and orderly.
The Committee was informed that the Monetary Base increased to HKD 2,072.94 billion by the end of the reporting period. All changes in the Monetary Base were fully consistent with changes in foreign exchange reserves, in line with the principles of the Currency Board system.
In terms of monitoring risks and instability factors, the Committee noted that in the United States, economic growth momentum was sustained by strong AI capital expenditure and robust consumer spending. However, ongoing Middle East conflicts continued to drive energy-related inflation, and a stronger-than-expected labor market reignited concerns about potential Federal Reserve interest rate hikes. Simultaneously, deepening worries about fiscal sustainability led to a sharp rise in long-term bond yields, further pressuring future fiscal conditions.
Regarding the Asia-Pacific region, the Committee observed that despite ongoing Middle East conflicts, regional economies posted solid growth in the first quarter, partly benefiting from strong export performance driven by AI. However, energy shocks pushed up regional inflation, and downward pressure on some regional currencies prompted several central banks to significantly raise policy rates.
The Committee noted that Hong Kong's economic growth accelerated in the first quarter, driven by generally stronger domestic and external demand, with growth momentum continuing into the second quarter. Inflation picked up but remained contained, while the labor market stayed largely stable. On the other hand, supported by positive market sentiment, the residential property market maintained its upward momentum, while the commercial property market continued to face pressure, although prime-grade office space in core areas showed signs of improvement. Looking ahead, the economic outlook is expected to remain solid, but its prospects are still subject to downside risks, including the Middle East conflicts, the sustainability of the AI investment boom, evolving global trade policies, and the trajectory of US policy interest rates.