Hong Kong bought nearly $ 6 billion worth of US dollars this week to stop its own money from climbing out of the legal scope of its trading.
The Hong Kong Monetary Authority (HKMA) entered after the city's dollar hit its strong peg end, which led to 7.75 per dollar, and this was the first time since 2020 they took this specific action.
An officer at HKMA's New York office Reported Bloomberg has confirmed that purchases are real, made by phone, and quickly made. The decision was that it was being dropped by the US dollar value, dragging Hong Kong's dollar to levels full peg.
HKMA, which acts as the central city bank, was previously intervened by selling the dollar in 2022 and 2023 when the local currency became weak and almost break down below 7.85. At this time, they need to keep the approach. It is real-world emergency management to defend a system since the '80s.
China watches Fannie Mae while moving away from the treasures
As the HKMA moved to the markets, the central bank of Taiwan did the same. On the same Friday, Taiwan's dollar jumped 3% against the greenback-the biggest one day move since 1988. Their middle bank had no choice but to intervene as well. In the regional, every financial authority is now talking to money swings, and no one is still sitting.
Earlier this year, a title about President Donald Trump's Overhaul Fannie Mae and Freddie Mac reached the tables of China's foreign exchange regulators. That Beijing's attention caught the attention.
Officials in the State Administration of Foreign Exchange (SAFE) immediately told their team to look at the investment risks tied to that change.
Both Fannie and Freddie are mortgage companies that become home loans in investment products. The US government took them to the 2008 crash, but Trump now wants the government's hands to be out of them.
Standing with Chinese officials is the idea of mortgage -supported security that still carry a indicated US government guarantee. Considering the safe ones – and even direct equity stakes in Fannie and Freddie – as much as possible replacements for US wealth.
Nor did they predict. People who are familiar with the agency say the transfer is based on protecting China's massive foreign reserves, which is deeply tied to US dollar assets.
China's handling of US currency are leftovers from exporting the country's export. The factories bombed products for the west, returned cash, and the excess was to -shoveled with wealth to help Washington keep the lights.
That pile reached $ 4 trillion in 2014 and has not been to under $ 3 trillion since 2016. At one point, 60% of China's reserves were in US dollar assets, with treasures forming. But the flaws in that portfolio began to show up quickly.
A paper written by Pan Liu and Zhang Weiwan, also from Tsinghua, in 2024, warned that what happened to Russia's money showed how much US control was through its dollar system. They said “the lesson for China is clear.”
Between January 2022 and December 2024, China collapsed with US treasury handling 27%, up to $ 759 billion, a drop way faster than the 17% decline seen from 2015 to 2022.
China has not just thrown treasures. They are Reported Turn on agency bonds – security issued by companies like Fannie Mae. These bonds carry identical credit ratings but better pay. From 2018 to early 2020, China increased the agency's bonds by 60%, reaching $ 261 billion.
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