I reviewed the HKD-USD exchange rate and found it quite stable for years no matter what "big events" happened.

Why so?


1 Answer 1


Just to make it an Answer: Because the exchange rate has been "pegged" to a specific value since 1983 by the Hong Kong government, rather than being allowed to drift freely.

"In 1972, the Hong Kong dollar was pegged to the U.S. dollar at a rate of 5.65 H.K. dollar = 1 U.S. dollar. This was revised to 5.085 H.K. dollar = 1 U.S. dollar in 1973. Between 1974 and 1983, the Hong Kong dollar was floated. On 17 October 1983, the currency was pegged at a rate of 7.8 H.K. dollar = 1 U.S. dollar, through the currency board system."

-- Wikipedia article on Hong Kong dollar.

The Wikipedia article Linked Exchange Rate provides some additional detail about how this is managed, and notes that in practice some minor variation will occur.

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