View source for Hong Kong dollar

{{Short description|Currency of Hong Kong}}
{{redirect|HKD|the airport in Japan|Hakodate Airport}}
{{Use Hong Kong English|date = March 2022}}
{{Use dmy dates|date=April 2020}}
{{Infobox currency
| local_name_lang1 = zh
| local_name1 = 港元
| iso_code = HKD
| using_countries = {{flag|Hong Kong}}
| unofficial_users = {{flag|Macau}} (alongside [[Macanese Pataca]])
| date_of_introduction = 1846
| date_of_introduction_source = <ref>{{cite web|url=https://www.hkma.gov.hk/eng/key-functions/money/hong-kong-currency/money-past-and-present/history-of-note-issuing-banks-in-hong-kong/|title=History of Note-issuing Banks in Hong Kong|publisher=[[Hong Kong Monetary Authority]]|access-date=2024-10-01}}</ref>
| inflation_rate = 1.7%<ref>{{cite web|url=http://www.censtatd.gov.hk/hkstat/sub/sp270_tc.jsp?tableID=052&ID=0&productType=8|title=表052：消費物價指數 （2014年10月至2015年9月＝100）政府統計處|publisher=[[Census and Statistics Department (Hong Kong)|Hong Kong Census and Statistics Department]]|access-date=23 May 2017|archive-url=https://web.archive.org/web/20170616162044/http://www.censtatd.gov.hk/hkstat/sub/sp270_tc.jsp?tableID=052&ID=0&productType=8|archive-date=16 June 2017|url-status=live}}</ref> (March 2022 est.)
| pegged_with = [[United States dollar|U.S. Dollar]] (USD)<ref>{{cite web|title=Hong Kong Monetary Authority – Monetary Stability|url=http://www.hkma.gov.hk/eng/key-functions/monetary-stability.shtml|website=hkma.gov.hk|access-date=13 June 2016|archive-url=https://web.archive.org/web/20160531191557/http://www.hkma.gov.hk/eng/key-functions/monetary-stability.shtml|archive-date=31 May 2016|url-status=live}}</ref> <br/> US$1.00 USD = HK$7.80±0.05
| pegged_by = [[Macanese pataca]] (MOP$) <br/> HK$1.00 = MOP$1.03
| subunit_ratio_1 = {{frac|1|10}}
| subunit_name_1 = {{lang|zh-hk|[[Jiao (currency)|毫]]}} (''hòu'') ("háo") (Chinese only)
| subunit_ratio_2 = {{frac|1|100}}
| subunit_name_2 = {{lang|zh-hk|仙}} (''Sin'') ("xiān") (Chinese)<br/> [[Cent (currency)|cent]] (plural: cents, symbol: [[Cent sign|¢]]) (English)
| subunit_ratio_3 = {{frac|1|1000}} (historical)
| subunit_name_3 = {{lang|zh-hk|[[Chinese cash (currency unit)|文]]}} (''mành'') ("wèn") (Chinese)<br/>[[Mill (currency)|mil]] (English)
| plural = Dollars (English only)
| symbol = [[Dollar sign|$]], HK$ or 元
| frequently_used_coins = [[Hong Kong ten-cent coin|10¢]], [[Hong Kong twenty-cent coin|20¢]], [[Hong Kong fifty-cent coin|50¢]], [[Dollar (Hong Kong coin)|HK$1]], [[Hong Kong two-dollar coin|HK$2]], [[Hong Kong five-dollar coin|HK$5]]
| rarely_used_coins = [[Hong Kong ten-dollar coin|HK$10]]
| coin_article = Coins of the Hong Kong dollar
| frequently_used_banknotes = [[Hong Kong ten-dollar note|HK$10]], [[Hong Kong twenty-dollar note|HK$20]], [[Hong Kong fifty-dollar note|HK$50]], [[Hong Kong one hundred-dollar note|HK$100]], [[Hong Kong five hundred-dollar note|HK$500]], [[Hong Kong one thousand-dollar note|HK$1,000]]
| rarely_used_banknotes = [[Hong Kong one hundred and fifty-dollar note|HK$150]] (Commemorative note)
| banknote_article = Banknotes of the Hong Kong dollar
| issuing_authority_title = [[Monetary authority]]
| issuing_authority = [[Hong Kong Monetary Authority]]
| issuing_authority_website = {{URL|www.hkma.gov.hk}}
| printer = [[Hong Kong Note Printing]]<br />
{{Collapsible list
| title = Issuing banks and authority
|1. [[Hong Kong Monetary Authority|Government of the Hong Kong Special Administrative Region]]<br />
2. [[HSBC (Hong Kong)|The Hong Kong and Shanghai Banking Corporation (HSBC)<br /> 香港上海滙豐銀行]]<br />
3. [[Standard Chartered Hong Kong|Standard Chartered (Hong Kong) <br />渣打銀行 [香港] ]]<br />
4. [[Bank of China (Hong Kong)|Bank of China (Hong Kong) <br />中國銀行 [香港] ]]}}
}}
{{Infobox Chinese
| title = Hong Kong dollar
| c = {{linktext|港元}}
| l = (Hong) Kong [[dollar]]
| showflag = y
| p = Gǎngyuán
| w = Kang3-yüan2
| bpmf = ㄍㄤˇ ㄩㄢˊ
| mi = {{IPA|cmn|kàŋ ɥɛ̌n|}}
| y = Góng yùn
| sl = Gong<sup>2</sup> yuen<sup>4</sup>
| gd = Gong2 yun4
| hk = Kong yun
| ci = {{IPA|yue|kɔ̌ːŋ y̏n|}}
| j = Gong2 jyun4
| t2 = {{linktext|港幣}}
| s2 = {{linktext|港币}}
| l2 = (Hong) Kong [[coin]]
| y2 = Góng bàih
| j2 = Gong2 bai6
| p2 = Gǎngbì
| w2 = Kang3-pi4
}}

The '''Hong Kong dollar''' ({{zh|t=港元}}, [[currency symbol|sign]]: '''HK$'''; [[ISO 4217|code]]: '''HKD''') is the official [[currency]] of [[Hong Kong]]. It is divided into 100 [[cent (currency)|cents]]. Historically, it was also divided into 1000 [[Mill (currency)|mils]]. The [[Hong Kong Monetary Authority]] is the [[central bank|monetary authority]] of Hong Kong and the Hong Kong dollar.

Three commercial banks are licensed by the Hong Kong Monetary Authority to issue their own banknotes for general circulation in Hong Kong. These banks — [[The Hongkong and Shanghai Banking Corporation|HSBC]], [[Bank of China (Hong Kong)|Bank of China]], and [[Standard Chartered Hong Kong|Standard Chartered]] — issue their own designs of banknotes in denominations of HK$20, HK$50, HK$100, HK$150, HK$500, and HK$1000, with all designs being similar to one another in the same denomination of banknote. However, the HK$10 banknote and all coins are issued by the [[Government of Hong Kong]].

{{As of|April 2019|post=,}} the Hong Kong dollar was the ninth-[[Template:Most traded currencies|most traded currency in the world]].<ref name=BIS>{{cite web|title=Triennial Central Bank Survey Foreign exchange turnover in April 2019|url=https://www.bis.org/statistics/rpfx19_fx.pdf|publisher=Bank for International Settlements|access-date=16 September 2019|page=10|date=16 September 2019}}</ref> Hong Kong uses a [[Linked exchange rate system in Hong Kong|linked exchange rate system]], trading since May 2005 in the range US$1:HK$7.75–7.85.

Apart from its use in Hong Kong, the Hong Kong dollar is also used in neighbouring [[Macau]]. It is pegged at 1 Hong Kong dollar to 1.03 [[Macanese pataca]]s, and is generally accepted at par or MOP 1.00 for retail purchases.<ref>{{Cite web |url= http://www.fodors.com/world/asia/china/macau/travel-tips/the-basics-2801154 |title=The Basics {{!}} Fodor's Travel |access-date= 9 April 2016 |archive-url= https://web.archive.org/web/20160424205614/http://www.fodors.com/world/asia/china/macau/travel-tips/the-basics-2801154 |archive-date=24 April 2016 |url-status=live  }}</ref>

==History==
{{see also|Trade dollar#United Kingdom}}
{{Economy of Hong Kong}}

When [[British Hong Kong|Hong Kong]] was established as a free trading port in 1841, there was no local currency in everyday circulation. Foreign currencies such as Indian [[rupee]]s, [[Spanish dollar#Asia|Spanish or Mexican 8 reales]], and [[Chinese cash (currency unit)|Chinese cash]] coins were circulated instead.<ref name="hk$-history">{{cite web|title=Hong Kong Currency (Local History Unit, Hong Kong Museum of History, 1993) |publisher=hk.history.museum |url=http://hk.history.museum/en/pspecial_2.php |archive-url= https://archive.today/20120709035019/http://hk.history.museum/en/pspecial_2.php |url-status=dead |archive-date=9 July 2012 |access-date=8 January 2012 }}</ref> Since 1825, it had been the policy of the British government to introduce [[sterling silver]] coinage to all of its colonies, and to this end, in 1845, the Spanish or Mexican 8 reales coins were set at a legal tender value of 4 shillings, 2 pence [[pound sterling|sterling]] (50 pre-decimal pence).{{citation needed |date=January 2020 |reason=where did this value equivalence come from?}} But just as in the case of the [[British North America]]n colonies, the attempts to introduce the sterling coinage failed to overcome the strong local adherence to the silver [[Spanish dollar]] system that had been in wide circulation across the [[Far East]], emanating for centuries from [[Manila]] in the [[Captaincy General of the Philippines|Philippines]] as part of the [[Spanish East Indies]] in the [[Spanish Empire|Spanish colonial empire]] through the [[Manila galleon|Manila-Acapulco Galleon Trade]] with the coins minted in the [[Hispanic America|Spanish Americas]] in [[New Spain|Mexico]] or [[Peru]] or [[Bolivia]].

By 1858, the British government gave up all attempts to influence the currency situation in Canada, and by the 1860s, it came to the same realisation in Hong Kong: that there was no point in trying to displace an already existing currency system. In 1863, the [[Royal Mint]] in London began issuing special subsidiary coinage for use in Hong Kong within the dollar system, though other national currencies circulated unofficially for years afterwards.<ref name="hk$-history"/> In 1866, a [[Hong Kong Mint|local mint]] was established at Cleveland Street in [[Causeway Bay]] on [[Hong Kong Island]] for the purpose of minting Hong Kong silver dollar and half dollar coins of the same value and similar likeness to their [[Spanish dollars#Asia|Spanish/Mexican]] counterparts.<ref name="hk$-history"/> The Chinese did not, however, receive these new Hong Kong dollars well, and in 1868, the [[Hong Kong Mint]] was closed down with a loss of $440,000. The machinery at the Hong Kong mint was sold first to [[Jardine Matheson]] and, in turn, to the Japanese and used to make the first [[Japanese yen|Yen]] coins in 1870. In the 1860s, banknotes of the new British colonial banks, the [[Hong Kong and Shanghai Banking Corporation]] and the [[Chartered Bank of India, Australia and China]], denominated in dollars, also began to circulate in both Hong Kong and the wider region.

In 1873, [[Panic of 1873|the international silver crisis]] resulted in a devaluation of silver against gold-based currencies. Since the silver dollars in the US and Canada were attached to a gold exchange standard, this meant that the silver dollars circulating along the China coast dropped in value as compared to the [[United States dollar|U.S. dollar]] and the [[Canadian dollar]].

===Early 20th century===

By 1895, the circumstances had changed to the extent that there was now a dearth of [[Spanish dollars#Asia|Spanish/Mexican dollars]] and the authorities in both [[British Hong Kong|Hong Kong]] and the [[Straits Settlements]] were putting pressure on the authorities in London to take measures to have a regular supply of silver dollar coins. London eventually acquiesced and legislation was enacted in attempts to regulate the coinage. New [[British trade dollar]]s were coined at the mints in [[Kolkata|Calcutta]] and [[Mumbai|Bombay]] for use in both Hong Kong and the [[Straits Settlements]]. In 1906, the Straits Settlements issued their own silver dollar coin and attached it to a gold sterling exchange standard at a fixed value of 2 shillings and 4 pence. This was the point of departure between the Hong Kong unit and the Straits unit.

In [[British Weihaiwei]], the Hong Kong dollar circulated jointly with the [[Chinese yuan]] from 1914 to 1930, when [[Weihaiwei]] was returned to the [[Republic of China (1912–1949)|Republic of China]].

By 1935, only Hong Kong and China remained on the silver standard. In that year, Hong Kong, shortly after China did, abandoned silver and introduced a crawling peg to sterling of £1 = HK$15.36 to HK$16.45. It was from this point in time that the concept of a Hong Kong dollar as a distinct unit of currency came into existence. The One-Dollar Currency Note Ordinance of that year led to the introduction of one-dollar notes by the government and the government acknowledged the Hong Kong dollar as the local monetary unit. It was not until 1937 that the [[legal tender]] of Hong Kong was finally unified. In 1939, the Hong Kong dollar was put on a fixed peg of HK$16 = £1 ($1 = 1[[shilling|s]] 3[[penny|d]]).

The discussion about switching from the silver standard to the gold standard began as early as 1930. A commission report was released in May 1931 which concluded that it was important for Hong Kong to facilitate the free flow of capital with China and adhering to the same monetary standard as China was thus preferred. The report also recommended the Hong Kong government only take over the burden of note issuance when the banks failed to do so. In fact, the Hong Kong government was not willing to take up the logistics of note issuance, and some officials even thought that the public had greater degree of confidence in the notes issued by those long-established banks than that by the government.<ref>{{cite book |last1=Latter |first1=Tony |title=Hong Kong's Money: The History, Logic and Operation of the Currency Peg |date=2007 |publisher=Hong Kong University Press |location=Hong Kong |page=35}}</ref>

During the [[Japanese Occupation of Hong Kong|Japanese occupation]], the [[Japanese military yen]] were the only means of everyday exchange in Hong Kong. When the yen was first introduced on 26 December 1941, the exchange rate was ¥1 = HK$2. However, in August 1942, the rate was changed to HK$4 to ¥1. The yen became the only legal tender on 1 June 1943. The issue of local currency was resumed by the Hong Kong government and authorised local banks after liberation, with the pre-war rate of HK$16 = £1 being restored. The yen was exchanged at a rate of ¥100 = HK$1. On 6 September 1945, all military yen notes used in Japanese colonies were declared void by the [[Ministry of Finance (Japan)|Japanese Ministry of Finance]].

===Post-WWII period===
[[File:1 dollar Victoria of Hong Kong 1867.jpg|thumb|250px|[[Silver coin]]: 1 dollar Victoria of Hong Kong, issued in 1866, 1867, 1868, it was the first official currency of [[British Hong Kong]] and also the first [[trade dollar]] in the [[Far East]].]]
[[File:1 Trade dollar of UK 1902B.png|thumb|250px|[[Silver coin]]: 1 British Trade Dollar, issued from 1895 to 1935, was originally used for the British colonies and protectorates in the Far East, including British Hong Kong, the [[Straits Settlements]]... but after the introduction of the [[Straits dollar]] in 1903, the British trade dollar was only used by Hong Kong.]]

====The Hong Kong dollar in the sterling area====

After the end of the Second World War, the Hong Kong dollar was re-pegged to sterling at a fixed rate identical to the pre-war level.<ref>{{cite book |last1=Latter |first1=Tony |title=Hong Kong's Money: The History, Logic and Operation of the Currency Peg |date=2007 |publisher=Hong Kong University Press |location=Hong Kong |pages=43}}</ref> Meanwhile, the United Kingdom made efforts to maintain the [[sterling area]] with countries of the British Commonwealth as well as its colonies. It imposed exchange controls on non-sterling area countries, barring them from freely converting British pounds into US dollars, but no such restriction was placed on sterling area countries. As a colony of the British Empire, Hong Kong was obliged to observe the sterling area regulations. Nevertheless, its unique geo-economic position afforded Hong Kong the ability to defy exchange controls by operating a dual system with the sterling area and a free exchange market principally with the US dollar, which was technically illegal from 1949 to 1967.<ref name="Hong Kong University Press">{{cite book |last1=Goodstadt |first1=Leo |title=Uneasy Partners: The conflict between public interests and private profit in Hong Kong |date=2009 |publisher=Hong Kong University Press |location=Hong Kong |pages=59}}</ref> Hong Kong economy specialist Leo Goodstadt argues that ministers and officials in London were bound to tolerate Hong Kong's situation, given Hong Kong's extensive trade with China, and the long collusion between officials in Hong Kong, bankers and local business communities.<ref>{{cite book |last1=Goodstadt |first1=Leo |title=Uneasy Partners: The conflict between public interests and private profit in Hong Kong |date=2009 |publisher=Hong Kong University Press |location=Hong Kong |pages=61}}</ref> The [[People's Republic of China]] (PRC), established by the [[Chinese Communist Party]] in 1949, was in dire need of foreign currency, especially after the [[Korean War]] (1950–1953) and the [[Sino-Soviet split]] in the early 1960s, for international trade with countries of non-Soviet blocs. The British sterling obtained through Hong Kong was able to finance 28% and 46% of the PRC's total imports from 1963 to 1967 and from 1970 to 1971 respectively.<ref name="Hong Kong University Press"/> Of the British sterling obtained by the PRC through Hong Kong during 1953 and 1971, about 40–50% was supplied by [[the Hongkong and Shanghai Banking Corporation]] (HSBC), the de facto "central bank" in Hong Kong, which accounted for 10% of annual foreign currency needed by the PRC in the period.<ref>{{cite web |last1=中孚 |title=「識時務者：從晚清到後九七，滙豐銀行和它的中國故事」(2020-06-18) |url=https://theinitium.com/article/20200618-opinion-hsbc-china-story/ |website=The Initium Media |date=18 June 2020 |access-date=2 November 2020}}</ref>

==== The impacts of the devaluation of the pound in 1967====

In the 1960s, the UK found it difficult to keep the value of sterling as it was, with its role as official reserve currency even within the [[sterling area]]. In 1964, sterling was 83% of the official reserves of overseas sterling area countries, but this share had decreased to 75% in 1966 and to 65% in 1967.<ref name="The Sterling Area">{{cite web |last1=Mushin |first1=Jerry |title=The Sterling Area |url=https://eh.net/encyclopedia/the-sterling-area/ |website=EH.Net |publisher=Economic History Association |access-date=30 May 2020}}</ref> When sterling was devalued by the UK in 1967, the Hong Kong dollar's peg to the pound resulted in a re-valuation from $16 to $14.5, a 10% [[devaluation]] against the pound and 5.7% devaluation against the US dollar.<ref name="The Empire Strikes Back: Hong Kong">{{cite journal |last1=Schenk |first1=Catherine R. |title=The Empire Strikes Back: Hong Kong and the Decline of Sterling in the 1960s |journal=The Economic History Review |date=2004 |volume=57 |issue=3 |page=570|doi=10.1111/j.1468-0289.2004.00288.x |s2cid=154967331 }}</ref> The unilateral devaluation sparked a circle of grievances among local business communities as well as colonial officials in Hong Kong because the official reserves and private savings in sterling were substantial in Hong Kong. In the 1950–60s, as Hong Kong accumulated significant reserves in sterling with its economic growth, the money supply was exponentially expanded from £140–£160 million in the late 1950s to £363 million in October 1967, equivalent to 10% of the UK's total sterling liabilities to the overseas sterling area before the devaluation.<ref name="The Empire Strikes Back: Hong Kong"/> Subsequently, Hong Kong and London engaged in talks about compensation and protection against further losses. Considering the potential diversification of official reserves from sterling to the US dollars by Hong Kong government officials, London agreed to offer exchange guarantees to protect Hong Kong against any potential devaluation of sterling in the future, the first to receive such guarantees among the sterling area countries.<ref>{{cite book |last1=Goodstadt |first1=Leo |title=Uneasy Partners: The conflict between public interests and private profit in Hong Kong |date=2009 |publisher=Hong Kong University Press |location=Hong Kong |pages=61–2}}</ref>

====Floating currency system, 1974–1983====

After the US's cessation of the convertibility between gold and the U.S. dollar in October 1971, Britain abandoned the fixed exchange rate with the U.S. dollar and extended the exchange controls also to the sterling area countries, which put an effective end to the sterling area in 1972.<ref name="The Sterling Area"/> In the same year, the Hong Kong dollar was pegged to the [[United States dollar|U.S. dollar]] at a rate of HK$5.65 = US$1, revised to HK$5.085 = US$1 in 1973. From 1974 to 1983, the Hong Kong dollar was not anchored to another currency, changing the monetary regime from a currency board system to a floating currency system.

====Linked exchange rate system since 1983====
[[File:USD to Hong Kong Dollar exchange rate.webp|thumb|300px|right|
{{legend|#DE2910|[[United States dollar|USD]] / Hong Kong Dollar [[exchange rate]]|outline=#D5D5D5}}
]]
On 17 October 1983, the Hong Kong dollar was officially pegged to the U.S. dollar at a rate of HK$7.80 = US$1, officially switching back to the [[Hong Kong Monetary Authority#Currency board system|currency board system]]. The peg of the Hong Kong dollar to the U.S. dollar in 1983 took place in the context of Sino-British negotiations regarding the future of Hong Kong after 1997. Due to the lack of public confidence in the talks, on 24 September 1983, the Hong Kong dollar was devalued by 15% over 2 days to a historical low at HK$9.60 to US$1. Public panic set in and there were runs on foodstuffs, marking [[Black Saturday (1983)]].<ref>{{cite book |last1=Lee |first1=Allen Peng-fei |title=Memoirs by Allen Lee |date=2004 |publisher=CUP |location=Hong Kong |page=124}}</ref> Amidst the monetary crisis, John Greenwood, an economist who was later dubbed the "architect of the [[linked exchange rate system]]" in Hong Kong,<ref>{{cite news |last1=Van Der Kamp |first1=Jake |title=Architect of Hong Kong dollar peg takes Jake down a peg or two |url=https://www.scmp.com/business/article/1908870/architect-hong-kong-dollar-peg-takes-jake-down-peg-or-two |access-date=5 June 2020 |publisher=South China Morning Post |date=3 February 2016}}</ref> proposed to peg the Hong Kong dollar to the U.S. dollar with a return to the former currency board system. The proposal received support from two government officials within the Monetary Affairs Branch of the Hong Kong government, namely the Deputy Secretary for Monetary Affairs Tony Latter and the government economist Alan McLean as a practical way to restore confidence in the Hong Kong dollar.<ref>{{cite book |last1=Greenwood |first1=John |title=Hong Kong's Link to the US Dollar: Origins and Evolution |year=2007 |publisher=Hong Kong University Press |location=Hong Kong |page=104 }}</ref> After discussions between London and Hong Kong, the Financial Secretary of Hong Kong [[John Bremridge]] announced that the Hong Kong dollar would be pegged to the U.S. dollar at a rate of HK$7.80 to US$1 in a currency board fashion on 17 October 1983.

When recalling the choice of rate, Tony Latter notes that a rate of HK$7.25 to HK$7.50 was considered a reasonable range in macroeconomic terms, given a rate against the U.S. dollar of around HK$6.60 before the crisis and a rate around HK$8.30 to HK$8.80 when the government's intention to change monetary regime was revealed in early October. In political terms, the government did not want to set the rate too weak so as to warrant international allegations of currency manipulation for competitive advantages, or too strong a rate so as to result in high interest rates and the eventual abandonment of the original exchange rate. HK$7.80 was finally selected in hopes of demonstrating that the situation had been properly stabilized and it was felt that the rate below HK$8.00 could achieve this purpose psychologically.<ref>{{cite book |last1=Latter |first1=Tony |title=Hong Kong's Money: The History, Logic and Operation of the Currency Peg |date=2007 |publisher=Hong Kong University Press |location=Hong Kong |pages=56–7}}</ref>

[[John Bremridge]] was once quoted saying that the rate was somewhat "a number off the air", but the most important thing was the restoration of public confidence in the Hong Kong dollar with the peg amidst the crisis.<ref>{{cite book |last1=Lee |first1=Allen Peng-fei |title=Memoirs by Allen Lee |date=2004 |publisher=CUP |location=Hong Kong |page=125}}</ref> The solution in its current form was favored by government officials for reasons beyond monetary considerations. Financially, the currency peg was designed not to require the [[Bank of England]] to lend its reserves to maintain Hong Kong's currency peg. Politically, the currency board system demonstrated the autonomy London had given to Hong Kong in economic policymaking amidst British negotiations with China to grant Hong Kong's higher autonomy after 1997.<ref>{{cite book |last1=Greenwood |first1=John |title=Hong Kong's Link to the US Dollar: Origins and Evolution |year=2007 |publisher=Hong Kong University Press |location=Hong Kong |page=105 }}</ref> As envisioned, the currency board monetary regime continues to function with the same pegged rate beyond the handover of sovereignty of Hong Kong to China in 1997.

===Post-1997 period===

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 [[Hong Kong Government|government]] and three local banks ([[The Hongkong and Shanghai Banking Corporation|HSBC]], [[Bank of China (Hong Kong)|Bank of China]] and [[Standard Chartered Hong Kong|Standard Chartered]]) under the supervision of the [[Hong Kong Monetary Authority]], which was a semi-independent public body established in the early 1990s to regulate banks and manage exchange funds and now serves as the territory's de facto "[[central bank]]".<ref>{{cite journal |last1=Scott |first1=Ian |title=Organizations in the Public Sector in Hong Kong: Core Government, Quasi-Government and Private Bodies with Public Functions |journal=Public Organization Review: A Global Journal |date=2003 |volume=3 |issue=3 |pages=247–267|doi=10.1023/A:1025385431809 |s2cid=150842470 }}</ref> Banknotes are printed by [[Hong Kong Note Printing Limited]]. A bank can issue a Hong Kong dollar only if it has the equivalent exchange in US dollars on deposit. The currency board system ensures that Hong Kong's entire monetary base is backed with US dollars at the linked exchange rate. The resources for the backing are kept in Hong Kong's [[exchange fund]], which is among the largest official reserve in the world. Hong Kong also has huge deposits of US dollars, with official foreign currency reserves of US$361 billion as of March 2016.<ref>[http://www.hkma.gov.hk/eng/key-information/press-releases/2011/20111107-3.shtml Hong Kong's Latest Foreign Currency Reserve Assets Figures Released] {{Webarchive|url=https://web.archive.org/web/20120406212535/http://www.hkma.gov.hk/eng/key-information/press-releases/2011/20111107-3.shtml# |date=6 April 2012 }}, Hong Kong Monetary Authority, April 2016</ref>

In a speech addressing the issue of who determines the monetary policy in Hong Kong on 13 May 2002, Tony Latter, the Deputy Chief Executive of the [[Hong Kong Monetary Authority|Hong Kong Monetary Authority (HKMA)]], contended that the Financial Secretary together with the HKMA in the Hong Kong SAR Government were responsible for that. He acknowledged the heavy and direct influence of the Federal Reserve of the United States on Hong Kong's monetary policy under the currency peg, but argued that "It was Hong Kong's choice, and we do not require any permission from US to continue or discontinue it".<ref>{{cite web |last1=Latter |first1=Tony |title=Who or what determines monetary policy in Hong Kong? |url=https://www.bis.org/review/r020515e.pdf |website=Bank for International Settlements |access-date=28 May 2020}}</ref>

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 HK$7.75 to the US dollar. The lower limit has been lowered from 7.80 to 7.85 (by 100 [[percentage in point|pip]]s per week from 23 May to 20 June 2005).<ref>{{cite news |title= Hong Kong Monetary Authority, Annual Report 2005 |url= http://www.legco.gov.hk/yr05-06/english/panels/fa/papers/fa0504cb1-1338-4e.pdf |access-date= 12 June 2012 |archive-url= https://web.archive.org/web/20121030141538/http://www.legco.gov.hk/yr05-06/english/panels/fa/papers/fa0504cb1-1338-4e.pdf |archive-date= 30 October 2012 |url-status= live |df= dmy-all }}</ref> 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 Hong Kong dollar being used as a proxy for speculative bets on a [[Chinese renminbi|renminbi]] revaluation.

==Terminology==

{| class="wikitable"
!
!Chinese
!''[[Yale romanization of Cantonese|Yale]]'' (Cantonese)
!''[[Pinyin]]'' (Mandarin)
!English
|-
|Formal currency name
|{{lang|zh-hk|{{linktext|港元}}}} / {{lang|zh-hk|港幣}}
|''góng yùhn / góng bàih''
|''gǎngyuán / gǎngbì''
|Hong Kong dollar
|-
|Formal unit name :1<br />Formal unit name :{{frac|1|10}}<br />Formal unit name :{{frac|1|100}}
|{{lang|zh-hk|元}} or {{lang|zh-hk|圓}}<br />{{lang|zh-hk|毫}}<br />{{lang|zh-hk|仙}}
|''yùhn<br />hòuh<br />sīn''
|''[[Chinese yuan|yuán]]<br />háo<br />xiān''
|dollar<br />dime<br />cent
|-
|Other unit names :1<br />Other unit names :{{frac|1|10}}<br />Other unit names :{{frac|1|100}}
|{{lang|zh-hk|蚊}}<br />{{lang|zh-hk|角}}<br />{{lang|zh-hk|分}}
|''mān<br />gok<br />fān''
|''wèn<br />jiǎo<br />fēn''
|dollar<br />dime<br />cent
|}

In formal [[Cantonese]], the {{lang|zh-hk|圓}} or {{lang|zh-hk|元}} ({{zh|cy=yùhn}}) character is used to describe the Hong Kong dollar. In informal Cantonese, {{lang|zh-hk|蚊}} ({{zh|cy=mān}}) is used. The use of the character {{lang|zh-hk|蚊}} ({{zh|cy=mān|labels=no}}) originates from a change of tone of the name of the currency denomination used in China in imperial times {{lang|zh-hk|[[Chinese cash (currency unit)|文]]}} ({{zh|cy=màhn}}), which was the chief currency denomination until the introduction of the [[Chinese yuan|yuan]] in the late 19th century.

The dollar is divided into 100 cents, with the character {{lang|zh-hk|仙}} ({{zh|cy=sīn}}, a transliteration of “cent”) used on coins and in informal Cantonese. However, {{lang|zh-hk|仙}} is now only used in the stock market, as it now is no longer issued as a coin or note due to its small value, and thus is no longer used in regular cash transactions. The amount of 10 cents is called 1 ''hou'' ({{lang|zh-hk|毫}}) in Cantonese.

To express prices in informal Cantonese, for example HK$7.80, the phrase is {{lang|zh-hk|七個八}} ({{zh|cy=chāt go baat|l=seven units eight}}); in financial terms, where integer values in cents exist, e.g., HK$6.75, the phrase is {{lang|zh-hk|六個七毫半}} ({{zh|cy=luhk go chāt hòuh bun|l=six units and seven dime half}}; a denomination of five cents is normally expressed as “half”, unless followed by another five, such as 55 cents when preceded by a dollar value); $7.08 is {{lang|zh-hk|七蚊零八仙}} ({{zh|cy=chāt mān lìhng baat sīn|l=seven dollars zero eight cents}}).

===Slang terms===

In Hong Kong, the following slang terms are used to refer to various amounts of money:

{|class=wikitable
!Chinese name
!Cantonese Yale Romanization
!Value
!Meaning
|-
|{{lang|zh-hk|辰砂}}||''sàhnsā''||cents||Rarely used; ''lit.'' [[mortar and pestle|ground]] [[cinnabar]] (therefore small in size), which is used in [[Chinese medicine]]
|-
|{{lang|zh-hk|斗零}}||''dáulíng''||5¢ coins||''lit.'' dram; the weight of the coin, approximately 1.37 g; 5¢ coin is no longer in circulation
|-
|{{lang|zh-hk|大餅}}||''daaihbéng''||$1||''lit.'' big cracker; refers to its circular shape
|-
|{{lang|zh-hk|草／兜／條}}||''chóu/dāu/tíu''||$10||''lit.'' grass/bowl/stripe; slang terms
|-
|{{lang|zh-hk|青蟹}}||''chēngháaih''||$10||''lit.'' green crab; refers to the colour of the old style banknotes
|-
|{{lang|zh-hk|花蟹／公仔紙}}||''fāháaih / gōngjáijí''||$10||''lit.'' flowery crab, colourful paper; refers to the colour of the new style banknotes
|-
|{{lang|zh-hk|䊆糈／嚿水}}||''gauhséui''||$100||''lit.'' a lump of water; “water" stands for money in Cantonese
|-
|{{lang|zh-hk|紅底／紅衫魚}}||''hùhngdái / hùhngsāamyú''||$100||''lit.'' red underwear, [[Red snapper (fish)|red snapper]]; refers to the red colour of the notes
|-
|{{lang|zh-hk|大牛}}||''daaihngàuh''||$500||''lit.'' big [[bull]]; refers to a picture of a bull on the note in pre-war
|-
|{{lang|zh-hk|金牛}}||''gāmngàuh''||$1,000||''lit.'' golden bull; refers to the gold colour of the notes
|-
|{{lang|zh-hk|棟}}||''duhng''||$1,000||''lit.'' building; uncommon slang term
|-
|{{lang|zh-hk|皮}}||''pèih''||$10,000||''lit.'' skin; slang term
|-
|{{lang|zh-hk|雞嘢}}||''gāiyéh''||$10,000||''lit.'' chicken stuff; uncommon slang term, can also mean $1
|-
|{{lang|zh-hk|餅}}||''béng''||$10,000||''lit.'' cracker; uncommon slang term
|-
|{{lang|zh-hk|球}}||''kàuh''||$1,000,000||''lit.'' ball; slang term, usually used in buying stocks
|-
|{{lang|zh-hk|碼}}||''máh''||$1,000,000,000||''lit.'' yard
|}

Some of these terms are also used by [[overseas Chinese]] to refer to equivalent denominations of their local currency. A slang term in English sometimes used for the Hong Kong dollar is "Honkie".<ref>{{cite web|author-first1=Alex|author-last1=Frangos|url=https://www.wsj.com/articles/SB10001424052748703510304574627172229357170 |title=A Telling Move for the Hong Kong Dollar?|archive-url=https://web.archive.org/web/20170202120542/https://www.wsj.com/articles/SB10001424052748703510304574627172229357170# |archive-date=2 February 2017|work=[[The Wall Street Journal]]|date=30 December 2009|url-access=limited}}</ref>

==Coins==

{{main|Coins of the Hong Kong dollar}}

In 1863, [[Hong Kong one-mil coin|1-mil]] ({{frac|1|10}}-cent), [[Hong Kong one-cent coin|1-cent]] and [[Hong Kong ten-cent coin|10-cent]] coins were introduced, followed in 1866 by [[Hong Kong five-cent coin|5-cent]], [[Hong Kong twenty-cent coin|20-cent]], [[Hong Kong fifty-cent coin|half-dollar]] and [[Hong Kong one-dollar coin|1-dollar]] coins. The 1-mil and 1-cent were struck in bronze, with the 1 mil a holed coin. The remaining coins were struck in silver. Production of the 1-mil ended in 1866, whilst that of the half-dollar and 1-dollar ceased in 1868, with only the half-dollar (now with the denomination given as 50 cents) resuming production in 1890. Production of all silver coins was suspended in 1905, only briefly resumed in 1932 and 1933 for the production of 5-cent coins.

In 1934, the last [[Hong Kong one-cent coin|1-cent coins]] were issued, but the last minting was 1941. These were not issued because the Japanese sank a ship carrying 1-cent coins bound for Hong Kong in the [[World War II|Second World War]]. The following year (1935), cupro-nickel 5 and 10 cents were introduced, replaced by nickel in 1937 and nickel-brass between 1948 and 1949. Copper-nickel 50 cents were issued in 1951 and first bore the name "fifty cents" in both Chinese and English, but these were changed to nickel-brass in 1977.

In 1960, cupro-nickel 1-dollar coins were introduced, and then reduced in size in 1978. They were followed in 1975 by nickel-brass 20 cents and cupro-nickel [[Hong Kong two-dollar coin|2-dollar coins]] (both scallop shaped) and, in 1976, by [[decagon]]al, cupro-nickel [[Hong Kong five-dollar coin|5-dollar coins]], changed to a round thicker shape in 1980. The 5-cent coin was last issued in 1979, but last struck in 1988. In 1994, a bimetallic [[Hong Kong ten-dollar coin|10-dollar coin]] was introduced.

Starting in 1993, prior to the establishment of the HKSAR, coins with [[Elizabeth II of the United Kingdom|Queen Elizabeth II]]'s portrait were gradually withdrawn from circulation. Most of the notes and coins in circulations feature Hong Kong's ''[[Bauhinia blakeana|Bauhinia]]'' flower or other symbols. Coins with the Queen's portrait are still legal tender, but these are slowly being phased out. However, most still remain in circulation. Because the redesign was highly sensitive with regard to political and economic reasons, the designing process of the new coins could not be entrusted to an artist but was undertaken by [[Joseph Yam]], Chief Executive of the [[Hong Kong Monetary Authority]], himself, who found in the Bauhinia the requested "politically neutral design" and did a secret "scissors and paste job".<ref>Joseph Yam's Viewpoint article, 18 November 1999, [http://www.hkma.gov.hk/eng/publications-and-research/reference-materials/viewpoint/19991118.shtml  ''Joseph Yam's coin designs''] {{Webarchive|url=https://web.archive.org/web/20130206014333/http://www.hkma.gov.hk/eng/publications-and-research/reference-materials/viewpoint/19991118.shtml# |date=6 February 2013 }}</ref>

In early 1997, to commemorate [[Transfer of sovereignty over Hong Kong|Hong Kong's transfer of sovereignty from Britain to the PRC]], the government issued a new commemorative coin set which depicted Chinese cultural themes and Hong Kong's landmarks and 19 and 97, marking the year 1997, on each side of the designs.

As of today, coins in denominations of [[Hong Kong ten-dollar coin|HK$10]], [[Hong Kong five-dollar coin|HK$5]], [[Hong Kong two-dollar coin|HK$2]], [[Hong Kong one-dollar coin|HK$1]], [[Hong Kong fifty-cent coin|50 cents]], [[Hong Kong twenty-cent coin|20 cents]] and [[Hong Kong ten-cent coin|10 cents]] are issued by the [[Hong Kong Monetary Authority]] on behalf of the [[Government of Hong Kong]].

{|class="wikitable" style="font-size: 90%"
|+ Bauhinia Series (since 1993)
!Value !! Obverse !! Reverse !! Diameter !! Mass !! Edge !! Composition !! first year !! issue date
|- {{Coin-yellow-color}}
| [[Hong Kong ten-cent coin|10-cent]]
|rowspan="3"|Bauhinia, "HONG KONG"
|rowspan="3"|Value, year of minting
| 17.5&nbsp;mm
| 1.85 g
| plain
|rowspan="3"| brass-plated steel
|rowspan="3"| 1993
|rowspan="3"|1 January 1993
|- {{Coin-yellow-color}}
| [[Hong Kong twenty-cent coin|20-cent]]
| 18.0-19.0&nbsp;mm
| 2.59 g
| scalloped
|- {{Coin-yellow-color}}
| [[Hong Kong fifty-cent coin|50-cent]]
| 22.5&nbsp;mm
| 4.92 g
| milled
|- {{Coin-silver-color}}
| [[Hong Kong one-dollar coin|HK$1]]
|rowspan="3"|Bauhinia, "HONG KONG"
|rowspan="3"|Value, year of minting
| 25.5&nbsp;mm
| 7.1 g
| milled
|rowspan="3"| [[cupronickel]]
|rowspan="3" | 1993
| 1 January 1993
|- {{Coin-silver-color}}
| [[Hong Kong two-dollar coin|HK$2]]
| 26.3-28.0&nbsp;mm
| 8.41 g
| scalloped
|rowspan="2" | 1 January 1993
|- {{Coin-silver-color}}
| [[Hong Kong five-dollar coin|HK$5]]
| 27.0&nbsp;mm
| 13.5 g
| milled with lettered middle groove
|- {{Coin-yellow-color}}
|{{Coin-silver-color}}| [[Hong Kong ten-dollar coin|HK$10]]
|Bauhinia, "HONG KONG"
|Value, year of minting
| 24.0&nbsp;mm
| 11.0 g
| alternate plain & milled
| cupronickel ring, brass center
| 1993
|{{Coin-silver-color}}| 1 January 1993
|}

==Banknotes==
{{main|Banknotes of the Hong Kong dollar}}
{{Pie chart
|caption = Banknotes circulated by the three different note issuers, 2023<ref name="stat2020hkd">{{cite web |url=https://www.statista.com/statistics/869499/hong-kong-note-issuing-banks-market-share/ |title=Breakdown of note-issuing banks in Hong Kong as of December 2023, by share of banknotes in circulation |access-date=2024-09-19 |df=dmy-all }}</ref>
|label1 = [[The Hongkong and Shanghai Banking Corporation]] 
|value1 = 55.4
|color1 = red
|label2 = [[Bank of China (Hong Kong)]]
|value2 = 35.9
|color2 = pink
|label3 = [[Standard Chartered Hong Kong]]
|value3 = 8.7
|color3 = green
}}

The issue of Hong Kong dollar notes is governed today by the [[Hong Kong Monetary Authority]] (HKMA), the governmental currency board of Hong Kong. Under licence from the HKMA, three [[commercial bank]]s issue their own banknotes for general circulation in the region. They are [[The Hongkong and Shanghai Banking Corporation|Hongkong and Shanghai Banking Corporation Limited]]; the [[Bank of China (Hong Kong)|Bank of China (Hong Kong) Limited]]; and the [[Standard Chartered Hong Kong|Standard Chartered Bank (Hong Kong) Limited]]. Notes are also issued by the HKMA itself. In most countries of the world the issue of banknotes is handled exclusively by a single [[central bank]] or government. The arrangement in Hong Kong is unusual but not unique; a comparable system is used for the [[Banknotes of the pound sterling|United Kingdom]], where seven banks issue banknotes.

The three commercial banks ([[The Hongkong and Shanghai Banking Corporation|HSBC]], [[Bank of China (Hong Kong)|Bank of China]] and [[Standard Chartered Hong Kong|Standard Chartered]]) each issue their own designs of banknotes in denominations of [[Hong Kong twenty-dollar note|HK$20]], [[Hong Kong fifty-dollar note|HK$50]], [[Hong Kong one hundred-dollar note|HK$100]], [[Hong Kong five hundred-dollar note|HK$500]] and [[Hong Kong one thousand-dollar note|HK$1,000]], with all designs being similar to the other in the same denomination of banknote. The [[Hong Kong ten-dollar note|HK$10 banknote]] is issued solely by the [[Hong Kong Monetary Authority]] on behalf of the [[Government of Hong Kong]], for a total of four banknote issuers in Hong Kong.

In 1845, the first private bank in Hong Kong, the [[Oriental Bank Corporation|Oriental Bank]], was founded. However, banknotes were not produced until the 1860s, when the Oriental Bank, the [[Chartered Bank of India, Australia and China]] and the [[Hong Kong and Shanghai Banking Corporation]] began issuing notes. Denominations issued in the 1860s and 1870s included 1, 5, 10, 25, 50, 100 and 500 dollars. These notes were not accepted by the Treasury for payment of government dues and [[tax]]es, although they were accepted for use by merchants. [[Hong Kong twenty five-dollar note|25 dollar notes]] did not survive beyond the end of the 19th century, whilst the [[Hong Kong one-dollar note|1-dollar notes]] (only produced by the [[HSBC]]) were issued until 1935.

Under the Currency Ordinance of 1935, banknotes in denominations of [[Hong Kong five-dollar note|5 dollars]] and above issued by the three authorised local banks, the [[Mercantile Bank of India, London and China]], the Chartered Bank of India, Australia and China and the Hong Kong and Shanghai Banking Corporation, were all declared legal tender. The government took over production of 1 dollar notes. In 1941, the government introduced notes for [[Hong Kong one-cent note|1 cent]], [[Hong Kong five-cent note|5 cents]] and [[Hong Kong ten-cent note|10 cents]] due to the difficulty of transporting coins to Hong Kong caused by the [[Second World War]] (a ship carrying 1941 1-cent coins was sunk, making this unissued coin very rare). Just before the [[Japan]]ese occupation, an emergency issue of 1 dollar notes was made consisting of overprinted Bank of China 5 [[Chinese yuan|yuan]] notes.

In 1945, paper money production resumed essentially unaltered from before the war, with the government issuing [[Hong Kong one-cent note|1 cent]], [[Hong Kong five-cent note|5 cents]], [[Hong Kong ten-cent note|10 cents]], and [[Hong Kong one-dollar note|1-dollar notes]], and the three banks issuing 5, 10, 50, 100 and 500-dollar notes. 1-dollar notes were replaced by coins in 1960, with only the 1-cent note issued by the government after 1965.

In 1975, the [[Hong Kong five-dollar note|HK$5]] notes were replaced by coins, whilst HK$1,000 notes were introduced in 1977. The Mercantile Bank was absorbed by the HSBC in 1978 and ceased issuing notes. In 1985, HK$20 notes were introduced, whilst in 1993, HK$10 coins were introduced and the banks stopped issuing HK$10 notes. In 1994 the HKMA gave authority to the [[Bank of China]] to issue notes.

After a less-than-successful trial from 1994 to 2002 to move the HK$10 denomination from the banknote format (issued by the banks) to the coin format (government-issued), HK$10 notes are currently the only denomination issued by the HKMA, having acquired the note printing plant at [[Tai Po]] from the [[De La Rue|De La Rue Group]] of the UK on behalf of the government. These notes were printed in paper in 2002 and in [[polymer banknote|polymer]] since 2007. All older HK$10 banknotes, although rare and being phased out, remain legal tender.

The latest series of banknotes was issued starting in 2018. [[Banknotes of the Hong Kong dollar#Commemorative banknotes of the Hong Kong dollar|Commemorative banknotes]] have also been issued celebrating the note-issuing banks' anniversaries as well as the Olympic Games held in Beijing in 2008 and 2022.

{|class="wikitable" style="font-size: 90%"
|+ Banknotes - HK$10 and 2018 series 
|-
! Value !! [[The Hongkong and Shanghai Banking Corporation|HSBC issue]] !! [[Standard Chartered Bank (Hong Kong)|SCB issue]] !! !colspan="5"| [[Bank of China (Hong Kong)|BOC issue]] !! Theme
|-
| [[Hong Kong ten-dollar note|HK$10]] || || || || [[Hong Kong Monetary Authority]] issue; abstract design [https://www.hkma.gov.hk/eng/key-functions/money/hong-kong-currency/notes/design-security-features-of-ten-dollar-polymer-notes/]
|-
| [[Hong Kong twenty-dollar note|HK$20]] || [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-0020-HSB.htm]|| [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-0020-SCB.htm]|| [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-0020-BOC.htm]|| Tea Culture
|-
| [[Hong Kong fifty-dollar note|HK$50]] || [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-0050-HSB.htm]|| [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-0050-SCB.htm]|| [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-0050-BOC.htm]|| Butterfly and Flowers
|-
| [[Hong Kong one hundred-dollar note|HK$100]] || [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-0100-HSB.htm]|| [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-0100-SCB.htm]|| [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-0100-BOC.htm]|| [[Cantonese opera|Cantonese Opera]]
|-
| [[Hong Kong five hundred-dollar note|HK$500]] || [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-0500-HSB.htm]|| [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-0500-SCB.htm]|| [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-0500-BOC.htm]|| Hexagonal Rock Columns (Hong Kong UNESCO Global Geopark)
|-
| [[Hong Kong one thousand-dollar note|HK$1,000]] || [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-1000-HSB.htm]|| [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-1000-SCB.htm]|| [http://banknote.ws/COLLECTION/countries/ASI/HKG/HKGW2018-1000-BOC.htm]|| [[Skyline of Hong Kong]] (for [[Bank of China (Hong Kong)|BOC]]: Head in profile, digitalized brain, globe)
|-
|}

==Economics==

===Linked exchange rate system===

{{main|Linked exchange rate system in Hong Kong}}
[[File:HKD-USD v2.svg|350px|thumb|HKD/USD exchange rate since 1990]]

Since 1983, Hong Kong's [[exchange rate regime]], the linked exchange rate system, has been used for the Hong Kong dollar, pegging it to the [[United States dollar]] at a fixed rate of HK$7.80 = US$1. In this unique system, the [[Hong Kong Monetary Authority]] (HKMA) authorises the three note-issuing commercial banks to freely issue new banknotes provided that they deposit an equivalent value of United States dollars with the HKMA.

In practice, in the unique linked exchange rate system, the exchange rate of HK$7.80 = US$1 is strictly controlled by the [[Hong Kong Monetary Authority]] in the foreign exchange market by controlling supply and demand of Hong Kong dollars in order to influence the exchange rate being fixed. By this arrangement the HKMA guarantees to exchange United States dollars into Hong Kong dollars and vice versa, at the rate of 7.80. When the market rate is below 7.80, the banks will convert United States dollars for Hong Kong dollars from the HKMA, such that the supply of Hong Kong dollars will increase, and the market rate will climb back to 7.80. The same mechanism also works when the market rate is above 7.80, and the banks will convert Hong Kong dollars for United States dollars.

By this arrangement, the Hong Kong dollar is backed by one of the world's largest [[foreign exchange reserves]], which is over 7 times the amount of money supplied in circulation or about 48% of Hong Kong dollars at the end of April 2016.<ref>{{cite news|title=Hong Kong's Latest Foreign Currency Reserve Assets Figures Released|url=http://www.hkma.gov.hk/eng/key-information/press-releases/2016/20160506-3.shtml|access-date=21 May 2016|publisher=HKMA|date=6 May 2016|archive-url=https://web.archive.org/web/20160611043338/http://www.hkma.gov.hk/eng/key-information/press-releases/2016/20160506-3.shtml|archive-date=11 June 2016|url-status=live}}</ref>

===Renminbi peg debate===

Following the [[internationalization of the renminbi]] in the late 2000s and the inclusion of the [[renminbi]] in [[special drawing rights]], there has been some debates on pegging the Hong Kong dollar to the renminbi, instead of the United States dollar. Studies show that, if the Hong Kong dollar were to be re-pegged to the renminbi, Hong Kong would need over 2 trillion renminbi worth of assets to replace the HKMA's US$340 billion in foreign reserves as of 2015, which exceeds the amount of existing renminbi assets in Hong Kong's offshore market. Moreover, according to figures from the HKMA as of the end of 2014, renminbi deposits and certificates of deposits stood at 1.158 trillion renminbi, while outstanding renminbi bonds amounted to 381 billion and renminbi-denominated loans stood at 188 billion.<ref>{{Cite web |last1=Yiu|first1=Enoch|url= https://www.scmp.com/business/banking-finance/article/1856273/why-hong-kong-still-needs-peg-its-currency-us-dollar |title=Why Hong Kong still needs to peg its currency to US dollar |work= South China Morning Post, SCMP.com |date=8 September 2015 |access-date=23 May 2017 |archive-url=https://web.archive.org/web/20161216092210/http://www.scmp.com/business/banking-finance/article/1856273/why-hong-kong-still-needs-peg-its-currency-us-dollar |archive-date=16 December 2016 |url-status=live  }}</ref> Other studies show that while Hong Kong's financial and economic links are increasingly dominated by [[mainland China]], and previous concerns about the monetary openness of China's capital account are slowly receding, if China continues to open its capital account, the peg could shift from United States dollar to renminbi.<ref>{{Cite web|url= https://group.atradius.com/publications/economic-research-hong-kong-dollar-peg-2016.html |title=The Hong Kong dollar peg – change will come {{!}} Atradius |access-date= 23 May 2017 |archive-url= https://web.archive.org/web/20170424154706/https://group.atradius.com/publications/economic-research-hong-kong-dollar-peg-2016.html |archive-date= 24 April 2017 |url-status=live  }}</ref>

However, in January 2016, the volatility in the renminbi and China's financial markets expanded to Hong Kong's markets and its currency. The renminbi offshore overnight borrowing rate, CNH HIBOR, soared to 66.8% on 12 January after the [[People's Bank of China]] (PBOC), the central bank of China, intervened in the effort of squeezing out renminbi short speculations by tightening liquidity at Hong Kong commercial banks. The PBOC's move at the offshore market, coupled with another plunge in Chinese stocks, has led to investors’ fears that the Hong Kong dollar may be de-pegged from the US dollar in the foreseeable future. In response to the market speculation, the Hong Kong Monetary Authority said on 27 January that they would protect the Hong Kong dollar's linked exchange rate regime. As Hong Kong's financial markets are highly impacted by mainland China, the renminbi exchange rate as well as China's equity market remain in a state of high volatility and continue to weigh on Hong Kong markets and the Hong Kong dollar. However, the greater influence remains the US Federal Reserve, as whenever it raises interest rates and sends the US dollar higher, the linked Hong Kong dollar must become more expensive than un-pegged currencies, including the Chinese yuan.<ref>{{Cite web |url=https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/china_news/2016/04/06/A-Tale-of-Two-Currencies-Hong-Kong-Dollar-and-Chinese-Yuan.html |title=A Tale of Two Currencies: Hong Kong Dollar and Chinese Yuan |date=6 April 2016 |access-date=23 May 2017 |archive-url=https://web.archive.org/web/20170227053311/https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/china_news/2016/04/06/A-Tale-of-Two-Currencies-Hong-Kong-Dollar-and-Chinese-Yuan.html |archive-date=27 February 2017 |url-status=dead}}</ref>

==Exchange rates==

===Current exchange rates===
{{Exchange rate|HKD|TWD|KRW|INR|EUR|JPY|USD}}

===Historical exchange rates===
{| class="wikitable"
|+ History of Hong Kong's Exchange Rate System<ref>{{Cite web |url=http://www.hkma.gov.hk/eng/key-functions/monetary-stability/history-hong-kongs-exchange-rate-system.shtml |title=Hong Kong Monetary Authority – History of Hong Kong's Exchange Rate System |access-date=23 May 2017 |archive-url=https://web.archive.org/web/20170513133202/http://www.hkma.gov.hk/eng/key-functions/monetary-stability/history-hong-kongs-exchange-rate-system.shtml |archive-date=13 May 2017 |url-status=live  }}</ref>
|-
! Period
! Exchange rate regime
! Features
|- style="vertical-align: top;"
| 1863–1935
| '''Silver Standard'''
| Silver dollars as legal tender
|- style="vertical-align: top;"
| December 1935 – June 1972
| '''Sterling exchange'''
| Standard exchange rate:
*£1:HK$16 (December 1935 – November 1967)
*£1:HK$14.55 (November 1967 – June 1972)
|- style="vertical-align: top;"
| July 1972 – November 1974
| '''Fixed exchange rate against the US dollar'''
| Exchange rate:
*US$1:HK$5.650 (June 1972 – February 1973)
*US$1:HK$5.085 (February 1973 – November 1974)
|- style="vertical-align: top;"
| November 1974 – October 1983
| '''Free floating'''
| Exchange rates on selected days:
*US$1:HK$4.965 (25 November 1974)
*US$1:HK$9.600 ([[Black Saturday (1983)|24 September 1983]])
|- style="vertical-align: top;"
| 1983 – present
| '''Linked exchange rate system'''
|
*US$1:HK$7.80 (1983–1998)
<small>(for issue and redemption of Certificates of Indebtedness)</small>

*US$1:HK$7.75 (1998–2005)
<small>(The HKMA undertook to convert the HK dollars in licensed banks’ clearing accounts maintained with <br />the HKMA into US dollars at the fixed exchange rate of HK$7.75 to US$1. The rate moved to 7.80 by<br /> 0.0001 (1 pip) each calendar day starting from 1 April 1999 ending 12 August 2000.)</small>
*US$1:HK$7.75–7.85 (May 2005 onwards)
<small>HKMA set up upper and lower guaranteed limit since 18 May 2005</small>
|}

{{Most traded currencies}}

==See also==
* [[Economy of Hong Kong]]
* [[Hong Kong Monetary Authority]]

== Notes ==
{{Notelist}}

== References ==
{{Reflist}}

==Further reading==
'''Numismatics'''
*{{numis cite SCWC|date=1991}}
*{{numis cite SCWPM|date=1994}}

==External links==
{{Commons category}}
*[http://www.hkma.gov.hk/eng/key-functions/monetary-stability/notes-coins-hong-kong/notes.shtml Hong Kong Monetary Authority – Banknotes]
*[http://banknote.ws/COLLECTION/countries/ASI/HKG/HKG-HSB.htm banknote.ws – HKD banknotes issued by HSBC]
*[http://banknote.ws/COLLECTION/countries/ASI/HKG/HKG-SCB.htm banknote.ws – HKD banknotes issued by SCBHK]
*[http://banknote.ws/COLLECTION/countries/ASI/HKG/HKG-BOC.htm banknote.ws – HKD banknotes issued by BOCHK]
*[http://banknote.ws/COLLECTION/countries/ASI/HKG/HKG-GOV.htm banknote.ws – HKD banknotes issued by the HKSAR government]

{{Hong Kong topics}}
{{HK currency and coinage}}
{{Chinese currency and coinage|state=collapsed}}
{{Economy of Hong Kong navbox}}
{{dollar}}
{{Currencies of Asia}}
{{Portal bar|Asia|China|Hong Kong|Money|Numismatics}}
{{Authority control}}

{{DEFAULTSORT:Hong Kong Dollar}}
[[Category:1997 disestablishments in Hong Kong]]
[[Category:Currencies introduced in 1863]]
[[Category:Currencies introduced in 1997]]
[[Category:Currencies of the British Empire]]
[[Category:Currencies of Hong Kong]]
[[Category:Currencies with multiple banknote issuers]]
[[Category:Weihaiwei under British rule]]
[[Category:Dollar]]
[[Category:Currencies of Asia]]
[[Category:Circulating currencies]]