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USD/HKD explained: how the Hong Kong dollar peg works

USD/HKD has lived inside a band about 1% wide since 2005. That makes it one of the strangest charts in forex, and a great lesson in how pegs work.

Market guide · 5-minute read · Updated 2026-10-21

At a glance

US retail leverage is capped at 20:1 on this pair. Not every broker lists it. Check yours.

What moves it

The peg. Hong Kong runs a Linked Exchange Rate System. Since 1983 the Hong Kong dollar has been tied to the US dollar. Since 2005 the Hong Kong Monetary Authority (HKMA) has promised to keep USD/HKD between 7.75 and 7.85.

How the HKMA defends it.

• At 7.85 (weak side), it buys Hong Kong dollars and sells US dollars.
• At 7.75 (strong side), it does the opposite.

Each time, the amount of Hong Kong dollars in the banking system changes. That pushes local interest rates up or down, which pulls the price back inside.

Interest rates. Inside the band, the main driver is the Interest rate differential. When US rates sit above Hong Kong rates, traders tend to hold dollars. USD/HKD drifts toward 7.85. When Hong Kong rates rise above US rates, it drifts toward 7.75.

The Fed. Hong Kong's base rate follows US rates closely. So Fed decisions at 2:00 pm ET matter here too, just slowly.

Stock flows. Big flows into Hong Kong stocks, for example around share listings, can push it toward the strong side.

When it's busiest

Hong Kong is 12 hours ahead of New York in summer and 13 in winter. Most real trading happens in the Hong Kong day, about 9 pm to 4 am ET. The rest of the day is very quiet.

Its personality

• Tiny moves. The whole band is 1,000 pips wide, and the price can sit near one edge for months.
• Edge-hugging. It often trades right at 7.85 or 7.75 for long stretches while the HKMA steps in.
• The pip value is small in dollars. 10 Hong Kong dollars is only about 1.3 US dollars per standard lot.
• Swap costs matter more than price. With so little movement, the overnight Swap (rollover) can be the biggest number in a trade.

Reading it with our method

Our method still applies, but the chart is unusual.

1. The band is the bigger picture. 7.75 and 7.85 are the levels that matter most.
2. Turning points inside the band are small. Mark them on the daily chart, but expect them to be tiny.
3. Body-close rule. Only a candle body closing past a level counts.
4. Size from the stop. Use the lot size calculator. Then ask whether the swap cost makes the trade worth it at all.

For many traders, USD/HKD is better as a lesson than a trade. It shows how a central bank can hold a price in place, and how rate gaps drive currency flows.

Common mistakes

• Treating it like a free bet. "It can't go past 7.85" is true only while the peg holds.
• Using big size because moves are small. Size comes from your stop and your 1% rule, never from how calm a chart looks.
• Forgetting the swap. Holding for weeks can cost more than the move.
• Expecting EUR/USD-style action. It won't come. That's by design.

Questions