The key reasons for strong HKD are broad-based USD weakness, HIBOR-LIBOR spread, semiannual settlement and IPO activities in Hong Kong. Policy uncertainty has taken a backseat as the US government is ridden by mass scale protests and new surge in coronavirus cases.

Why is HKD so weak?

The Hong Kong dollar is suddenly appearing more vulnerable, after weeks of trading at the strong end of its band against the greenback. Late on Friday, the currency weakened in its biggest drop since mid-June, when the exchange rate was buffeted by Beijing's decision to impose laws curbing dissent in the city.

Is the USD strong in Hong Kong?

Why Hong Kong pegs its currency to the US dollar

In the past year, the Hong Kong dollar has been trading on the strong side of the band, despite the pandemic-induced economic recession. On Wednesday, the local currency was changing hands at around 7.76 per dollar.