The Hong Kong dollar is the official currency in the Hong Kong Special Administrative Region of the People’s Republic of China, or simply Hong Kong. The currency is also unofficially used in the Macau Special Administrative Region alongside the Macau pataca (MOP).
The Hong Kong dollar is the 13th most traded currency on the global foreign exchange market. Due to Hong Kong’s unique political and economic situation, it is one of the most interesting currencies in the world.
Abbreviations of the Hong Kong Dollar
The official name of the Hong Kong dollar in Chinese is gǎngyuán, and in Cantonese it is Góng yún which means the Harbor Money, referring to Hong Kong’s important role as a main harbor in the area. The Chinese sign for Hong Kong dollar is 港元 and in the Western World, it’s normally written as $ or HK$ to avoid confusion with the American dollar.
One Hong Kong dollar is divided into 100 cents, (sin or 仙 in Chinese), and 10 dimes (hóu or 毫 in Chinese). Note that dimes do not exist in physical form.
The official ISO-4217 code for the Hong Kong dollar is HKD.
The Hong Kong dollar has an impressive list of nicknames and slang for different amounts. Most of these names are based on the designs on the denominations or Cantonese expressions related to money.
Denominations of the Hong Kong Dollar
Since 1863, when the first coins were introduced in Hong Kong, they have gone through many changes. They have for instance existed in different values and shapes, and some of them have even had Queen Elizabeth II on them. In fact, the coins with Queen Elizabeth are still legal tender even though they are being phased out for more modern designs.
At the time this article was written the following denominations were in use.
All the coins in Hong Kong come in one of two versions, the Queen Elizabeth II Series that was printed between the 1950s and 1993 and are being phased out at the moment, or the Bauhinia Series that has been printed since the 1990s. The coins either have Queen Elizabeth II or the word Hong Kong with the value printed on the obverse side, as well as the year of printing on the reverse side.
The system used for banknotes in Hong Kong is quite confusing since every series comes in several versions based on which bank issued them. The latest series, 2010 Series, comes in one version issued by HSBC, one version issued by the Bank of China (Hong Kong), and one version issued by the Standard Chartered Bank (Hong Kong). All the different series have different designs but the same values.
The $150 bill is truly unique in its value, and because it’s actually a commemorative bill that’s so commonly used that it is often considered a part of the regular series.
History of the Hong Kong Dollar
In the year 1841, when Hong Kong was established as a free trading point, several currencies were used in the region. Some of the currencies that were used were the Indian rupee (INR), the Spanish dollar, and different Chinese currencies. After 1845, the British pound (GBP) became the official currency in Hong Kong, however, the Spanish dollar continued to dominate.
In the 1960’s England stopped trying to introduce GBP in Hong Kong and started minting a separate currency for the area. That currency acted as the base for the modern Hong Kong dollar used today. However, the currency has gone through major changes since then, and under the Japanese occupation during World War II, the yen was briefly used.
The HKD has been printed in several different areas including London, Bombay, and Calcutta. The currency has also been pegged to several currencies such as the American dollar (USD), the British pound (GBP), and the Chinese yuan (CNY).
Hong Kong Dollar Today
Today, the system used to regulate, print, and issue the Hong Kong dollar is completely unique to the area. Technically, Hong Kong doesn’t have a central bank. Instead, they use a currency board called the Hong Kong Monetary Authority (HKMA) which acts as the de facto central bank of Hong Kong. But it gets more complicated. The HKMA doesn’t issue the currency themselves but offers licenses to other banks that issue the currency for them. At the moment, the three following commercial banks have been issued a license to produce the Hong Kong Dollar:
- The Hong Kong and Shanghai Banking Corporation – HSBC
- Standard Chartered Bank (Hong Kong)
- Bank of China (Hong Kong)
All the issuing banks are required to have the amount of printed HKD in USD inside their banks in Hong Kong, otherwise, the currency loses its value. It is the only thing that insures the HKD.
The Hong Kong dollar is pegged to the American dollar and the Macau pataca is pegged to the Hong Kong dollar.
Trade the Hong Kong Dollar
Due to Hong Kong’s status as a free trading point, the interest in trading with the HKD is high. In fact, in 2016 HKD was the 13th most traded currency on the forex market representing 1.7% of the daily market share. It is placed between the Norwegian krone (NOK, 1.7%) and the Singapore dollar (SGD, 1.8%).
The Hong Kong dollar is widely traded with other leading Asian currencies such as the Japanese yen (JPY), Chinese renminbi (CNY), and the Thai Baht (THB). But in the end, most of the trades done with Hong Kong dollar are conducted together with the American dollar.
Trading with HKD/USD is a popular choice for Asian, European, and American traders. This particular currency pair offers good opportunities for both long and short-term trades. Due to the fact that the HKD is pegged to the USD, and that both currencies rarely fluctuate, it is usually easy to predict their price movements.