Added: 02/14/2006 |
Hong Kong dollar is an official currency of the Hong Kong Special Administrative RegionThe Hong Kong Dollar is the official currency of the Hong Kong Special Administrative Region of the People's Republic of China. The Basic Law of Hong Kong and the Sino-British Joint Declaration provides that Hong Kong retains full autonomy with respect to currency issuance. Currency in Hong Kong is issued by the Government and three local banks under the supervision of the territory's de facto central bank, the Hong Kong Monetary Authority. Bank notes are printed by Hong Kong Note Printing Limited. The most commonly used symbol for the Hong Kong dollar is the dollar sign ($).
The Hong Kong Dollar is accepted in southern parts of mainland China and Macau as well as some shopping malls in Singapore. Hong Kong people often call a Hong Kong dollar. This term possibly originated with the first syllable of "money". In written Chinese, however, Yuan is used, particularly in cheques and commercial documents.
Since 1983, the Hong Kong dollar is linked to the United States dollar.
The Hong Kong dollar has been pegged to the United States dollar since 17 October 1983 at HK$7.80 per U.S. dollar through the currency board system. A bank can only issue a Hong Kong dollar if it has the equivalent exchange in U.S. dollars on deposit. The currency board system ensures that Hong Kong's entire monetary base is backed with U.S. dollars at the linked exchange rate. The resources for this backing are kept in Hong Kong's Exchange Fund, which is among the largest official reserves in the world.
As of 18 May 2005, in addition to the lower guaranteed limit, a new upper guaranteed limit was set for the Hong Kong dollar at 7.75 to the USD. The lower limit will be lowered from 7.80 to 7.85 in five weeks, by 100 pips each week. The Hong Kong Monetary Authority indicated this move is to narrow the gap between the interest rates in Hong Kong and those of the United States. A further aim of allowing the Hong Kong Dollar to trade in a range is to avoid the HK dollar being used as a proxy for speculative bets on a Yuan (Renminbi) revaluation.
Nowadays, banknotes of legal tender in local circulation include six denominations of $10, $20, $50, $100, $500 and $1,000. The issue of $5 note was discontinued after 1975 when the government replaced it with the $5 regal coin.
The Government issues chinese coins of $10, $5, $2, $1, 50 cents, 20 cents and 10 cents. Until 1992 these coins were embossed with the Queen's head. In 1993 a programme was initiated to replace the Queen's Head series with a new series depicting the bauhinia flower. Commemorative coins and coin sets are sometimes produced for special occasions, for example the opening of the Hong Kong International Airport.
The Government, through the Hong Kong Monetary Authority (HKMA), has given authorization to three commercial banks-- The Hong Kong and Shanghai Banking Corporation (HSBC), Standard Chartered, and the Bank of China. The HKMA acquired the note printing plant at Tai Po from the De La Rue Group of the UK on behalf of the Government. The plant has been operating under the name of HKNPL since then. Currency notes in everyday circulation are $10, $20, $50, $100, $500 and $1,000.
In 2002, the HKSAR Government issued a new ten dollar note (which is printed directly by the HKMA, and not through the banks) in recognition of a continuing demand among the public for a note in addition to the coin. Various security features are incorporated in genuine Hong Kong banknotes.
The primary monetary policy objective of the Hong Kong Monetary Authority is to maintain exchange rate stability within the framework of the linked exchange rate system through sound management of the Exchange Fund, monetary operations and other means deemed necessary. The important underpinnings of the linked exchange rate system include the strong official reserves of Hong Kong, a sound and robust banking system, fiscal prudence and a flexible economic structure.
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