Description
Introduced in 1863, the Hong Kong dollar (Chinese: 港元), or HKD, is the official currency of Hong Kong. The symbol of the Hong Kong dollar is $, along with HK$, which is sometimes used to distinguish Hong Kong dollars from other dollar-denominated currencies. Hong Kong dollars are also used in Macau, where the local currency Macau patacan is pegged to HKD.
HKD banknotes are issued in six denominations: HK$10, HK$20, HK$50, HK$100, HK$500 and HK$1,000. The Hong Kong dollar is divided into 100 cents and issued in seven denominations: 10c, 20c, 50c, HK$1, HK$2, HK$5 and HK$10.
The Hong Kong dollar, the ninth most traded currency globally, is not a floating currency. It is pegged to the US dollar with a narrow trading band.
Economy
- Hong Kong has a free market economy, with the service sector accounting for over 92 percent of the total gross domestic product (GDP), having also low taxation and free port trade.
- With the HKMA holding one of the largest currency reserves globally along with virtually no public debt, a sound banking system, and a strong legal system together create the solid economy of Hong Kong.
- In 2020, Hong Kong was the 38th largest national economy by nominal GDP, with the country’s GDP being estimated at over US$355 billion.
- Hong Kong is considered the most favourable place to start a company in the world, because of being highly dependent on international trade and finance, with the number of registered start-ups sharply rising from 998 in 2014 to over 2800 in 2018.
- The Hong Kong Stock Exchange is the world’s fourth largest, with a market capitalisation of around US$6 trillion.
- Hong Kong, one of the largest and most expensive cities globally, has a relatively high rate of population living in poverty, amounting to almost 15 percent in 2017.
History
- In 1841, with no local currency, foreign currencies such as Indian rupees, Spanish and Mexican reales, and Chinese coins were used in Hong Kong.
- In 1863, the Royal Mint in London began issuing the first Hong Kong dollars.
- In 1935, abandoning the silver standard, Hong Kong pegged its currency to the British pound sterling.
- During the Japanese occupation, the Hong Kong dollar was replaced by the Japanese yen, becoming the only legal tender.
- In 1972, the Hong Kong dollar was pegged to the US dollar at the exchange rate of 1 USD = 5,65 HK$.
- Since that time, the Hong Kong dollar has continued to be pegged to the US dollar, with the periodically changing rate depending on the HKMA, which maintains the stability of HKD.
Trivia
- A nickname for the Hong Kong dollar is the ‘honkie’.
- Three commercial banks, such as Hong Kong and Shanghai Banking Corporation Limited (HSBC), the Bank of China (Hong Kong) Limited, and the Standard Chartered Bank (Hong Kong) Limited, are authorised to issue banknotes, under the licence from the Hong Kong Monetary Authority (HKMA), Hong Kong’s central bank.
