Hong Kong is a key financing channel, holding one of the largest stock markets in the world and providing the biggest gateway for international investment. Hong Kong has become one of the world’s leading currency trading centers, ranking third globally for U.S. Dollar trading. Any foreign investment enterprise may settle, buy and sell foreign currency in Hong Kong through a designated bank dealing in foreign exchange businesses. Article 112 of the Basic Law guarantees free flow of capital and free convertibility of the Hong Kong Dollar. The government asserts free convertibility of the Hong Kong Dollar does not impose foreign exchange controls. The Hong Kong Monetary Authority (HKMA) assures that the US Dollar trades in a narrow band between HKD 7.75-7.85.
Hong Kong’s grand official reserves offer back up for the Hong Kong Dollar providing a significant source of stability for upcoming generations.
Hong Kong Dollar is freely convertible into other currencies as there exists no foreign exchange controls in Hong Kong. The HKD has been officially linked to the USD since 1983. The link is maintained through the mechanism of certificates of indebtedness which are issued and redeemed by the Hong Kong Exchange Fund only against payment in US Dollar at a fixed exchange rate of HKD 7.80 to USD 1.00. The free-market exchange rate of the HKD against the USD for the nonbank public is governed by supply and demand, but has not fluctuated significantly from the fixed exchange rate.
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