Financially, the currency peg was designed not to require the Bank of England to lend its reserves to maintain Hong Kong’s currency peg. Although Hong Kong has been a part of China for many years, it is still largely operated as an autonomous region with a small economy of its own, which is ranked 39th in the world according to its GDP. The GDP growth of Hong Kong has been fairly volatile in the last 20 years; however, overall it has usually been over 5%, and occasionally as high as 10%. Rates of inflation have also been erratic – up to 10% during 1995, but actually being negative for over 4 years at the turn of the century.

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 renminbi revaluation. In 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 brokers capacity and experience silver dollars circulating along the China coast dropped in value as compared to the U.S. dollar and the Canadian dollar. The design of the peg means the HKMA raises or cuts the city’s benchmark interest rates in lockstep with rate changes by the US Federal Reserve, thereby giving up its independence to adjust monetary policy in response to changing economic conditions.

• Try to pay in smaller denominations to avoid getting fake cash back.
• 1-dollar notes were replaced by coins in 1960, with only the 1-cent note issued by the government after 1965.
• The Hong Kong Dollar has a low interest rate at present, and this makes it an appealing currency for carry traders.
• Create a chart for any currency pair in the world to see their currency history.

If they will accept Chinese yuan, they might put up a notice about it or a 元 symbol. Part of the reason for the slower use of electronic payment systems is that the Octopus cards are universally msci world index etf used by the locals. In Hong Kong, the simple Octopus cards are probably the most suitable electronic method for tourists. Live tracking and notifications + flexible delivery and payment options.

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, 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. The Hong Kong dollar was first seen as a distinct currency in 1863.

Some Cautionary Money Tips

Under capital control laws, a bank can only use HK dollars if it has the equivalent value of U.S. dollars on deposit. You’ll find that interbank transfers are comparatively easy in HK. However, the exchange rate (often about 1 USD per 5.8 HKD or a 2 HKD loss per US dollar) can be quite unfavorable, and the bank fees might be quite high (20 USD per 1,000 for example) depending on the banks involved. The money transfer situation is much easier in HK than in Chinese mainland where there are numerous regulations, and various money transfer methods are blocked or are illegal.

In recent times, the interest rates of the HKD have been pretty low. However, real estate developers’ debts, which are underwritten by the nation’s banks, are a volatile and significant influence on Hong Kong’s economy. For a long time, Hong Kong has been a key financial and trading hub in Asia thanks to its low taxes. Almost every significant securities house and global bank has housed an office in the country, and the Hong Kong Stock Exchange is rated the sixth largest in the world by market capitalisation.

New British trade dollars were coined at the mints in Calcutta and 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 as between the Hong Kong unit and the Straits unit. In 1972, the HK dollar was pegged to the U.S. dollar at a rate of HK$5.65 to $1 USD.

Xe Currency Charts

When Hong Kong was established as a free trading port in 1841, there was no local currency in everyday circulation. Banks often advertise free or low-cost transfers, but add a hidden markup to the exchange rate. Wise gives you the real, mid-market, exchange rate, so you can make huge savings on your international money transfers. In 1945, paper money production resumed essentially unaltered from before the war, with the government issuing 1 cent, 5 cents, 10 cents, and 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.

Thus far, the fake money that has been investigated by the police in Hong Kong is mostly poor in quality, and locals can spot the fake cash. At Hong Kong International Airport, currency exchange counters are open from early morning until late at night. Some stores, supermarket chain stores, and the 7-11 convenience stores (there are many in Hong Kong) will accept Chinese RMB cash, but usually, they want to take something like 20% of the value as profit.

How to Convert HKD to USD

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 taxes, although they were accepted for use by merchants. 25 dollar notes did not survive beyond the end of the 19th century, whilst the 1-dollar notes (only produced by the HSBC) were issued until 1935. London eventually acquiesced and legislation was enacted in attempts to regulate the coinage.

Why was the Hong Kong dollar pegged to the US dollar?

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. The peg saved Hong Kong from financial ruin in 1983 and continues to provide a stable exchange rate environment that has allowed the city to develop into an international financial centre. The Hong Kong Dollar is the currency in Hong Kong (HK, HKG). The United States Dollar is also known as the American Dollar, and the US Dollar.

Let China Highlights Help You Tour Hong Kong

The most commonly used app system in Hong Kong is Apple Pay. Other payment apps in use include Octopus’s “O! ePay” and Android Pay. It is fairly easy for travelers to find and use ATMs since they are everywhere except in remote areas such as in the countryside or small villages.

Quick Conversions from United States Dollar to Hong Kong Dollar : 1 USD = 7.8319158 HKD

Try to pay in smaller denominations to avoid getting fake cash back. So try to carry a supply of smaller bills and coins with you so that you can use it as you go around black swan event examples and to avoid fraud. As a foreigner, you probably are not familiar with the look and feel of real currency, so you might be more of a target for counterfeit fraud.

The 5-cent coin was last issued in 1979, but last struck in 1988. Three commercial banks are licensed by the Hong Kong Monetary Authority to issue their own banknotes for general circulation in Hong Kong. These banks, HSBC, Bank of China, and 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.