Three commercial banks are licensed by the Hong Kong Monetary Authority to issue their own banknotes for general circulation in Hong Kong. However, the HK$10 banknote and all coins are issued by the Government of Hong Kong. There are currently 1, 2, 5, 10, 20, 50, and 100 dollar denominations in circulation.
These were not issued because the Japanese sank a ship carrying 1-cent coins bound for Hong Kong in the Second World War. The following year (1935), cupro-nickel 5 and 10 cents were introduced, replaced by nickel in 1937 and nickel-brass between 1948 and 1949. Copper-nickel 50 cents were issued in 1951 and first bore the name «fifty cents» in both Chinese and English, but these were changed to nickel-brass in 1977. In 1863, 1-mil (1⁄10-cent), 1-cent and 10-cent coins were introduced, followed in 1866 by 5-cent and 20-cents, half-dollar and 1-dollar.
Understanding the HKD (Hong Kong Dollar)
In the context of the negotiations between China and Great Britain regarding the future of Hong Kong after 1997, trust in the Hong Kong dollar plummeted. Accounting for derivatives follows IFRS 9, which requires entities to recognize them at fair value, with changes recorded in profit and loss unless designated as hedging instruments. The Securities and Futures Ordinance (SFO) regulates derivative trading, imposing licensing requirements on market participants. Margin requirements for HKD futures contracts are set by the HKEX and vary based on contract size and volatility. The official currency of Hong Kong is denoted as both HKD and HK$, with HK$ being a more common abbreviation. You can easily identify the denominations by looking at the colors and designs on the notes.
The fixed exchange rate system seeks to maintain parity with the USD within a tight range, allowing HKD note-issuing banks to issue new banknotes only when they deposit an equivalent value of U.S. dollars with the authority. 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 banks issue their own banknotes for general circulation in the region.
Recommended Hong Kong Tour Plans
However, there is also a polymer version still circulating throughout the world. Back in 2007, Hong Kong wanted to test polymer banknote technology as they began printing the ten-dollar bank note. However, all three banks maintain the five Hong Kong-related themes which can be found on the back of the notes-with some variations in design that were determined by the note’s issuing bank.
Yuan’s Influence on Global Trade
To avoid getting counterfeit money in return, try to pay in smaller denominations. You can get a better rate at little storefront exchanges on the side streets near the building. The Hong Kong dollar is made up of 100 cents and is often shown with the HK$ prefix to differentiate it from other dollar-denominated currencies. Hong Kong is a leading global financial center and its economy is considered to be the freest in the world.
- The Hong Kong dollar was initially attached to the «gold standard» of the US dollar, but the international silver crisis in 1873 resulted in a devaluation of the Hong Kong dollar.
- This system provides exchange rate stability, benefiting businesses and investors by reducing currency risk.
- When U.S. rates rise, capital often flows out of Hong Kong in search of higher yields, putting downward pressure on the HKD.
- Under capital control laws, a bank can only use HK dollars if it has the equivalent value of U.S. dollars on deposit.
- Interest rate swaps allow firms to hedge against fluctuations in HKD borrowing costs, particularly given the currency’s linkage to U.S. monetary policy.
- Hong Kong, as a Special Administrative Region of China, enjoys a high degree of autonomy under the “one country, two systems” principle.
The various banks and banking networks offer different rates depending on their agreements with foreign banks. The HKD is the ninth most traded currency, and because it is pegged to the U.S. dollar, with upper and lower limits, it does not exhibit any strong unique correlations with other currencies. This trading band versus the USD has been in place since 1983, a beginner’s guide to income investing although the upper and lower limits have been adjusted periodically. The HKMA has about $450 billion+ USD in foreign reserves to thwart any attempts to break the peg with the USD. One notable attempt was made by legendary hedge fund manager George Soros in 1998. Our currency rankings show that the most popular Hong Kong Dollar exchange rate is the HKD to USD rate.
Discover where to exchange money, what the best rates are and more with our handy guide. The Faster Payment System (FPS), launched by the HKMA in 2018, allows instant fund transfers between banks and digital wallets using mobile numbers, email addresses, or QR codes. FPS supports both HKD and CNY transactions, making it a convenient tool for businesses and consumers. As of 2023, FPS has seen widespread adoption, with millions of registered users and billions of dollars processed annually. Interest income from HKD bonds is generally exempt from Hong Kong profits tax unless earned by a financial institution engaged in bond trading.
Hong Kong is also exploring a central bank digital currency (CBDC), known as the e-HKD, with pilot programs assessing its feasibility for cross-border payments and tokenized asset settlements. While no official launch date has been set, the initiative reflects Hong Kong’s commitment to maintaining a modern financial infrastructure. One of the most significant drivers is the interest rate gap between Hong Kong and the United States. Since the HKD is linked to the USD, local interest rates follow those set by the Federal Reserve. When U.S. rates rise, capital often flows out of Hong Kong in search of higher yields, putting downward pressure on the HKD. Conversely, when U.S. rates decline, liquidity in Hong Kong increases, sometimes leading to an appreciation of the currency.
Hong Kong Dollar Exchange Rates
Her expertise lies in medical and insurance-related content, particularly focusing on complex areas such as medical malpractice and liability insurance. Antoinette ensures that every piece of writing is clear, accurate, and free of legal and grammatical errors. Coins are also widely used, with common denominations including 10¢, 20¢, 50¢, HK$1, HK$2, and HK$5. The Hong Kong Dollar (HKD) is a widely used currency, but did you know it’s also used unofficially in Macau?
The Hong fxprimus review Kong Dollar serves as a financial bridge between East and West, facilitating trade, investment, and capital flows in one of the world’s most open economies. Its acceptance in international markets is tied to Hong Kong’s role as a global financial hub, with deep capital markets that attract multinational corporations, institutional investors, and financial intermediaries. Many foreign businesses settle transactions in HKD when operating in Asia, particularly in logistics, finance, and real estate. The Hong Kong Monetary Authority is the central bank responsible for managing the HKD. 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.
ATM Facilities in Hong Kong
Well, first things first, you’ll want to know that the Hong Kong Monetary Authority is responsible for the currency. It was first created in 1860 with the establishment of the Hong Kong Mint, but it wasn’t until 1863 that the process started. You’ll often see prices listed in cents on menus and price tags in Hong Kong. It’s widely used in the city-state and is also accepted in Macau, another special administrative region of China.
Banknotes are a type of HKD physical form that are widely accepted as a medium of exchange in Hong Kong. Coins with Queen Elizabeth II’s portrait were gradually withdrawn from circulation starting on New Year’s Day (1 January) 1993, prior to the establishment of the HKSAR. Most of the coins in circulation feature Hong Kong’s Bauhinia flower or other symbols. In formal Cantonese, the dollar is referred to as the «yùn» character, which is used for the formal currency name. This character is also used in informal Cantonese, although the character «mān» is sometimes used to refer to the dollar.
- So try to carry a supply of smaller bills and coins with you so that you can use it as you go around and to avoid fraud.
- The Hong Kong dollar was outlawed by the Japanese puppet government in 1943 and reinstated in 1945 after World War II.
- Nowadays, the Hong Kong dollar is one of the most traded currencies in the world, and it is an important part of the city’s economy.
The HKD is used in cross-border transactions, foreign exchange trading, and international investments. This system provides exchange rate stability, benefiting businesses demarker indicator and investors by reducing currency risk. It also aligns Hong Kong’s borrowing costs with U.S. interest rates, as local interest rates follow those set by the Federal Reserve. This means Hong Kong’s monetary policy is largely influenced by U.S. economic conditions rather than domestic factors. Initially, the Hong Kong Dollar was issued in both banknotes and coins, using designs inspired by Colonial motifs and history.
What is Hong Kong’s currency?
Our currency rankings show that the most popular US Dollar exchange rate is the USD to USD rate. We have major, minor, and over 20 exotic currencies that you can exchange online. Buy or sell Hong Kong dollars and we will deliver high-grade physical bills straight to your door within 24 – 48 hours. To answer this question, we must first delve into the history of currency in Hong Kong, how it came to be pegged to the US dollar, and how the peg influenced it. All of this will be covered in this article before we get to the speculations, but first, we should start with the basics. Like most bank notes these days, the Hong Kong dollar is made of paper.
The name “dollar” came from Spanish silver dollars which were introduced into China via Manila during the Manchu dynasty. The HKD market is characterized by its high liquidity and integration with global financial markets. The currency’s stability and the well-established financial infrastructure in Hong Kong contribute to its attractiveness for international investors. The HKD is also a major currency in the offshore RMB market, known as the CNH market, which facilitates Yuan-denominated transactions outside of mainland China. The HKD is widely used in international trade and finance, particularly in transactions involving Hong Kong. Its link to the USD and Hong Kong’s status as a major financial hub enhance its international appeal.
