The Hong Kong Government on Tuesday (10 July) bought large sums of United States dollars in an effort to rescue the tottering American currency from a deeper plunge.
HONGKONG WALL STREET OF BANKS IN CENTRAL; AMERICAN TOURISTS AND THE ENTRANCE OF HONGKONG SHANGHAI BANK; HONGKONG PEOPLE AND JAPANESE TOURISTS IN BUSY STREET; AMERICAN COUPLE ENTERING THE BANK OF AMERICA; FOREIGN CURRENCY RATES ON BLACK BOARD; ON LOOKER; A BUSINESSMAN READING NEWSPAPER "WILL WE FLOAT OUR DOLLAR?"; TOURISTS AND BUSINESSMEN ARE CHANGING MONEY YEN AND DOLLARS; MONEY CHANGER USING CHINESE ABACUS; GV OF HONGKONG HOTEL; TWO JAPANESE LADIES PAYING HOTEL BILLS AT THE CASHIER; JAPANESE TOURISTS BUYING DUTY-FREE GIFTS.
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Background: The Hong Kong Government on Tuesday (10 July) bought large sums of United States dollars in an effort to rescue the tottering American currency from a deeper plunge.
The intervention came as the dollar violated the lower permissible level of 4.9706 Hong Kong dollars to one United States dollar. Some banks in Hong Kong were buying at a rate of only 4.93 early in the day.
Trading on the colony's money exchanges was reported to be brisk, but there was no panic.
The Hong Kong dollar is tied to its American counterpart, and traders were predicting major developments on the money exchanges when the American currency began to slide last week.
Hong Kong derives much of its revenue from the tourist trade. Last year, more than a million visitors, mainly from the United States and from Japan, passed through the duty-free port spending millions of dollars on cameras, watches and clothing.
Hong Kong, like many European countries, had carrier set its hopes on the United States Federal Reserve Board taking concrete steps to support its floundering currency, but a silence from the White House has led the colony's traders to spark off brisk selling.
There are rumours that the Hong Kong dollar will soon float in an effort to sever the parity it has retained with the American dollar, but so far the Government has given no indication that such steps will be taken.
For the Japanese, the fall of the American dollar's exchange rate has made a substantial difference in duty-free shopping. There have been few reports of price rises in Hong Kong, but the Japanese Yen is being watched closely by money traders and shop-keepers alike while rumours continue to sweep the colony on the strength of both currencies which hold up the tourism industry.