Hong Kong dollar a natural hedge

Hong Kong Monetary Authority has a problem. It’s facing excessive inflows that is overwhelming its capacity to manage the Hong Kong dollar peg.

Investors switching out of the yuan since its devaluation last month have pushed up the Hong Kong dollar, which hit the high end of its peg to the US dollar at HK$7.75, triggering the Hong Kong Monetary Authority (HKMA) to spend some of its HK$3.27 trillion Exchange Fund to defend the currency peg for the first time in four months.