Hong Kong dollar

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"HKD" redirects here. For the airport whose IATA airport code is HKD, see Hakodate Airport.
Hong Kong dollar
港元 or 港幣 (Chinese)
Hk money.jpg Hk money coins.jpg
Banknotes Coins
ISO 4217 code HKD (num. 344)
Monetary authority Hong Kong Monetary Authority
 Website www.hkma.gov.hk
Official user(s)  Hong Kong
Unofficial user(s)  Macau
Inflation 4.3% (Hong Kong only)
 Source [1], Jan 2014 est.
Pegged with United States dollar = HK$7.75–7.85
Pegged by HK$ = 1.03 Macanese patacas
Subunit
 1/10 毫 (hou) (Chinese)
(no official English term for 10 cents)
 1/100 仙 (sin) (Chinese)
cent (English)
(no longer in circulation)
Symbol $ or HK$
Plural (no plural) (Chinese)
dollars (English)
 毫 (hou) (Chinese) (no plural) (Chinese)
 仙 (sin) (Chinese)
cent (English)
(no plural) (Chinese)
cents (English)
Coins 10¢, 20¢, 50¢, $1, $2, $5, $10
Banknotes $10, $20, $50, $100, $500, $1,000
Printer

Issuing banks:
HSBC
Standard Chartered
Bank of China
Printer:

Hong Kong Note Printing Limited
Hong Kong dollar
Traditional Chinese 港元
Simplified Chinese 港元

The Hong Kong dollar (sign: $; code: HKD; also abbreviated HK$) is the currency of Hong Kong. It is the thirteenth most traded currency in the world.[1] The Hong Kong dollar is subdivided into 100 cents. The currency is used in both Hong Kong and Macau, as the two regions are of close proximity and their currencies have similar exchange rates.

Terminology[edit]

In formal Cantonese, the 圓 or 元 (Jyutping: jyun4) character is used. In spoken Cantonese, 蚊 (Jyutping: man1) is used, perhaps a transliteration of the first syllable of “money”, although some suggest that the character is a corruption of (Jyutping: man4). The dollar is divided into 100 cents, with the character 仙 (Jyutping: sin1, a transliteration of “cent”) used on coins and in spoken Cantonese. However, 仙 is now only used in the stock market, as now it no longer has a note or coin form due to its small value, and is no longer used in regular transactions. 分 (pinyin: fēn; Jyutping: fan1) is used in Mandarin. The amount of 10 cents is called 1 houh in Cantonese (毫, Jyutping: hou4, on coins and in spoken Cantonese, 毫子, Jyutping: hou4 zip, in colloquial speech, 角, pinyin: jiǎo; Jyutping: gok3, in Mandarin). The mil was known as the man or tsin in Cantonese (文, pinyin: wén; Jyutping: man4, or 千, pinyin: qiān; Jyutping: cin1, on coins and in spoken Cantonese and Mandarin).

To express prices in spoken Cantonese, for example $7.80, the phrase is 七個八 (Jyutping: cat1 go3 baat3; literally: "seven units and eight [decimals]"); in financial terms, where integer values in cents exist, e.g., $6.75, the phrase is 六個七毫半 (Jyutping: luk6 go3 cat1 hou4 bun3; literally: "six and seven houh half"; fives in cents is normally expressed as “half”, unless followed by another five, such as 55 cents when preceded by a dollar value); $7.08 is 七蚊零八仙 (Jyutping: cat1 man1 ling4 baat3 sin1; literally: "seven dollars zero eight cents").

Slang terms[edit]

In Hong Kong, the following are slang terms used to refer to various amounts of money:

  • 辰砂 (Jyutping: san4 sa1): cents (Rarely used; ‘’lit.’’ cinnabar, ground (therefore small-size) which is used in Chinese medicine)
  • 斗零 (Jyutping: dau2 ling2): 5¢ coins (‘’lit.’’ the weight of the coin, approximately 1.37 g; 5¢ is no longer in circulation)
  • 大餅 (Jyutping: daai6 beng2): $1 (‘’lit.’’ big cracker; refers to its circular shape)
  • 草/兜/條 (Jyutping: cou2/dau1/tiu2): $10 (‘’lit.’’ grass/bowl/stripe; slang terms)
  • 青蟹 (Jyutping: ceng1 haai5): $10 (‘’lit.’' green crab; refers to the colour of the old style banknotes)
  • 花蟹/公仔紙 (Jyutping: faa1 haai5 / gong1 zai2 zi2): $10 (‘’lit.’’ flowery crab, colourful paper; refers to the colour of the new style banknotes)
  • 嚿水 (Jyutping: gau6 sui2): $100 (‘’lit.’’ a lump of water; “water" stands for money in Cantonese)
  • 紅底/紅衫魚 (Jyutping: hung4 dai2 / hung4 saam1 jyu2): $100 (‘’lit.’’ red back, red snapper; refers to the red colour of the notes)
  • 大牛 (Jyutping: daai6 ngau4): $500 (‘'lit. big bull); refers to a picture of a bull on the note in pre-war)
  • 金牛 (Jyutping: gam1 ngau4): $1,000 (‘’lit. golden bull; refers to the gold colour of the notes)
  • 棟 (Jyutping: dung6): $1,000 (‘’lit. building; uncommon slang term)
  • 皮 (Jyutping: pei4): $10,000 (‘’lit. skin; slang term)
  • 雞嘢 (Jyutping: gai1 je5): $10,000 (‘’lit.’' chicken stuff; uncommon slang term, can also mean $1)
  • 餅 (Jyutping: beng2): $10,000 (‘'lit. cracker; uncommon slang term)
  • 球 (Jyutping: kau4): $1,000,000 (‘’lit. ball; slang term, usually used in buying stocks)
  • 碼 (Jyutping: maa5): $1,000,000,000 (‘’lit. yard)

Some of these terms are also used by overseas Chinese to refer their local currency.

A common slang term in English, especially among Western expats living in Hong Kong, is "Honkie".

History[edit]

When Hong Kong was established as a free trading port in 1841,[2] there was no local currency in everyday circulation. Foreign currencies such as Indian rupees, Spanish and Mexican 8 reales, and Chinese cash coins circulated. Since 1825, it had been the policy of the British government to introduce sterling silver coinage to all of its colonies, and to this end, in 1845, the Spanish and Mexican 8 reales coins were set at a legal tender value of 4 shillings 2 pence sterling. But just as in the case of the British North American colonies, the attempts to introduce the sterling coinage failed to overcome the strong local adherence to the silver Spanish dollar system.

By 1858, London gave up all attempts to influence the currency situation in Canada, and, by the 1860s, it came to the same realisation in Hong Kong: that there was no point in trying to displace an already existing currency system. In 1863, the Royal Mint in London began issuing special subsidiary coinage for use in Hong Kong within the dollar system. In 1866, a local mint was established at Sugar Street in Causeway Bay on Hong Kong Island for the purpose of minting Hong Kong silver dollar and half dollar coins of the same value and similar likeness to their Mexican counterparts.

The Chinese did not however receive these new Hong Kong dollars well, and in 1868 the Hong Kong mint was closed down with a loss of $440,000. The machinery at the Hong Kong mint was sold first to Jardine Matheson and in turn to the Japanese and used to make the first Yen coins in 1870. In the 1860s, banknotes of the new British colonial banks, the Hong Kong and Shanghai Banking Corporation and the Chartered Bank of India, Australia and China, denominated in dollars, also began to circulate in both Hong Kong and the wider region.

In 1873, the international silver crisis resulted in a devaluation of silver against gold-based currencies. Since the silver dollars in the USA and Canada were attached to a gold exchange standard, this meant that the silver dollars circulating along the China coast dropped in value as compared to the US dollar and the Canadian dollar.

By 1895, the circumstances had changed to the extent that there was now a dearth of Mexican dollars and the authorities in both Hong Kong and the Straits Settlements were putting pressure on the authorities in London to take measures to have a regular supply of silver dollar coins. London eventually acquiesced and legislation was enacted in attempts to regulate the coinage. New British trade dollars were coined at the mints in Calcutta and Bombay for use in both Hong Kong and the Straits Settlements.

In 1906, the Straits Settlements issued their own silver dollar coin and attached it to a gold sterling exchange standard at a fixed value of 2 shillings and 4 pence. This was the point of departure as between the Hong Kong unit and the Straits unit.

By 1935, only Hong Kong and China remained on the silver standard. In that year, Hong Kong, shortly after China, abandoned silver and introduced a crawling peg to sterling of 1 pound = 15.36 to 16.45 dollars. It was from this point in time that the concept of a Hong Kong dollar as a distinct unit of currency came into existence.

The One-Dollar Currency Note Ordinance of that year led to the introduction of one-dollar notes by the government and the government acknowledged the Hong Kong dollar as the local monetary unit. It was not until 1937 that the legal tender of Hong Kong was finally unified. In 1939, the dollar was put on a fixed peg of 16 dollars = 1 pound (1 dollar = 1 shilling 3 pence).

A 100 Japanese military yen note

During the Japanese occupation, Japanese military yen were the only means of everyday exchange in Hong Kong. When the yen was first introduced on 26 December 1941, the exchange rate was 1 yen = 2 dollars. However, in August 1942, the rate was changed to 4 to 1. The yen became the only legal tender on 1 June 1943. The issue of local currency was resumed by the Hong Kong government and the authorised local banks after liberation, with the pre-war rate of 16 dollars = 1 pound being restored. The yen was exchanged at a rate of 100 yen = 1 dollar. On 6 September 1945, all yen notes were declared void.

In 1967, when sterling was devalued, the dollar's peg to the pound was increased from 1 shilling 3 pence to 1 shilling 4½ pence (14.5455 dollars = 1 pound) although this did not entirely offset the devaluation. 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.

As of 18 May 2005, in addition to the lower guaranteed limit, a new upper guaranteed limit was set for the Hong Kong dollar at 7.75 to the American dollar. The lower limit has been lowered from 7.80 to 7.85 (by 100 pips per week from 23 May to 20 June 2005).[3] The Hong Kong Monetary Authority indicated this move is to narrow the gap between the interest rates in Hong Kong and those of the United States. A further aim of allowing the Hong Kong dollar to trade in a range is to avoid the HK dollar being used as a proxy for speculative bets on a renminbi revaluation.

The Basic Law of Hong Kong and the Sino-British Joint Declaration provides that Hong Kong retains full autonomy with respect to currency issuance. Currency in Hong Kong is issued by the government and three local banks under the supervision of the territory's de facto central bank, the Hong Kong Monetary Authority. Bank notes are printed by Hong Kong Note Printing Limited.

A bank can issue a Hong Kong dollar only if it has the equivalent exchange in US dollars on deposit. The currency board system ensures that Hong Kong's entire monetary base is backed with US dollars at the linked exchange rate. The resources for the backing are kept in Hong Kong's exchange fund, which is among the largest official reserves in the world. Hong Kong also has huge deposits of US dollars, with official foreign currency reserves of 281.7 billion USD as of October 2011.[4]

Coins[edit]

Reverses of Hong Kong coins

In 1863, 1 mil, 1 and 10 cent coins were introduced, followed in 1866 by 5 and 20 cents, ½ and 1 dollar. The 1 mil and 1 cent were struck in bronze, with the 1 mil a holed coin. The remaining coins were struck in silver. Production of the 1 mil ended in 1866, whilst that of the ½ and 1 dollar ceased in 1868, with only the ½ dollar (now with the denomination given as 50 cents) resuming production in 1890. Production of all silver coins was suspended in 1905, only briefly resumed in 1932 and 1933 for the production of 5 cent coins.

In 1934, the last 1 cent coins were issued, but the last minting was 1941. These were not issued because of the Second World War. The following year (1935), cupro-nickel 5 and 10 cents were introduced, replaced by nickel in 1937 and nickel-brass between 1948 and 1949. Copper-nickel 50 cents were issued in 1951, these were changed to Nickel-brass in 1977.

In 1960, cupro-nickel 1 dollar coins were introduced, these were reduced in size in 1978. These were followed in 1975 by nickel-brass 20 cents and cupro-nickel 2 dollars (both scallop shaped), and in 1976 by decagonal, cupro-nickel 5 dollars, changed to a round thicker shape in 1980. The 5 cent was last issued in 1979, but last struck in 1988. In 1994, a bimetallic 10 dollar coin was introduced.

Starting in 1993, prior to the establishment of the SAR, coins with Queen Elizabeth II's portrait were gradually withdrawn from circulation. Most of the notes and coins in circulations feature Hong Kong's Bauhinia flower or other symbols. Coins with the Queen's portrait are still legal tender and can be seen, but these are slowly being phased out. However, most still remain in legal tender and are in circulation.

Because the redesign was highly sensitive with regard to political and economic reasons, the designing process of the new coins could not be entrusted to an artist but was undertaken by Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, himself who found in the bauhinia the requested "politically neutral design" and did a secret scissors and paste job.[5]

In 1997, to commemorate the Hong Kong transfer of sovereignty from Britain to the PRC, the government issued new one dollar coins which depicted a dragon and 19 and 97 on each side of the dragon.

Banknotes[edit]

Coins and banknotes

The issue of Hong Kong dollar notes is governed today by the Hong Kong Monetary Authority (HKMA), the governmental currency board of Hong Kong. Under licence from the HKMA, three commercial banks issue their own banknotes for general circulation in the region. Notes are also issued by the HKMA itself. In most countries of the world the issue of banknotes is handled exclusively by a single central bank or government. The arrangements in Hong Kong are unusual but not unique; a comparable system is used in the United Kingdom, where seven banks issue banknotes.

In 1845, the first private bank, the Oriental Bank, was founded. However, banknotes were not produced until the 1860s, when the Oriental Bank, the Chartered Bank of India, Australia and China and the Hong Kong and Shanghai Banking Company began issuing notes. Denominations issued in the 1860s and 1870s included 1, 5, 10, 25, 50, 100 and 500 dollars. These notes were not accepted by the Treasury for payment of government dues and taxes, although they were accepted for use by merchants. 25 dollar notes did not survive beyond the end of the 19th century, whilst the 1 dollar notes (only produced by the HSBC) were issued until 1935.

Under the Currency Ordinance of 1935, banknotes in denominations of 5 dollars and above issued by the three authorised local banks, (the Mercantile Bank of India Limited, the Chartered Bank of India, Australia and China and the Hong Kong and Shanghai Banking Corporation, were all declared legal tender. The government took over production of 1 dollar notes. In 1941, the government introduced notes for 1, 5 and 10 cents due to the difficulty of transporting coins to Hong Kong caused by the Second World War (a ship carrying 1941 1 cent coins was sunk, making this unissued coin very rare). Just before the Japanese occupation, an emergency issue of 1 dollar notes was made consisting of overprinted Bank of China 5 yuan notes.

In 1945, paper money production resumed essentially unaltered from before the war, with the government issuing 1, 5 and 10 cents, and 1 dollar notes, and the three banks issuing 5, 10, 50, 100 and 500 dollar notes. 1 dollar notes were replaced by coins in 1960, with only the 1 cent note issued by the government after 1965.

In 1975, the 5 dollar notes were replaced by a coin, whilst 1000 dollar notes were introduced in 1977. The Mercantile Bank was absorbed by the HSBC in 1978 and ceased issuing notes. In 1985, 20 dollar notes were introduced, whilst, in 1993, a 10 dollar coin was introduced and the banks stopped issuing 10 dollar notes. In 1994 the HKMA gave authority to the Bank of China to issue notes.

After a less-than-successful trial from 1994 to 2002 to move the 10-dollar denomination from the banknote format (issued by the banks) to the coin format (Government-issued), 10 dollar banknotes are currently the only denomination issued by the HKMA, having acquired the note printing plant at Tai Po from the De La Rue Group of the UK on behalf of the Government. The older 10-dollar banknotes are, although rare and being phased out, still circulating.

A commemorative polymer ten dollar note was issued in July 2007 to commemorate the 10th anniversary of Hong Kong's return to China.[6] The new notes will circulate along with other issues for a trial period of two years, though the initial batch released was largely snapped up by collectors.[7][8]

A new series of banknotes was issued starting in 2010.[9]

Linked exchange rate system[edit]

Main article: Linked exchange rate
Most traded currencies by value
Currency distribution of global foreign exchange market turnover[10][11]
Rank Currency ISO 4217 code
(Symbol)
 % daily share
(April 2013)
1
United States dollar
USD ($)
87%
2
Euro
EUR (€)
33%
3
Japanese yen
JPY (¥)
23%
4
Pound sterling
GBP (£)
12%
5
Australian dollar
AUD ($)
8.6%
6
Swiss franc
CHF (Fr)
5.2%
7
Canadian dollar
CAD ($)
4.6%
8
Mexican peso
MXN ($)
2.5%
9
Chinese yuan
CNY (¥)
2.2%
10
New Zealand dollar
NZD ($)
2.0%
11
Swedish krona
SEK (kr)
1.8%
12
Russian ruble
RUB (₽)
1.6%
13
Hong Kong dollar
HKD ($)
1.4%
14
Singapore dollar
SGD ($)
1.4%
15
Turkish lira
TRY (₺)
1.3%
Other 12%
Total[12] 200%

The primary monetary policy objective of the Hong Kong Monetary Authority is to maintain exchange rate stability within the framework of the linked exchange rate system through sound management of the Exchange Fund, monetary operations and other means deemed necessary.

The important underpinnings of the linked exchange rate system include the strong official reserves of Hong Kong, a sound and robust banking system, fiscal prudence and a flexible economic structure.

In 2007, Jim Rogers, a former partner in George Soros's Quantum Fund, said the Government should abolish the Hong Kong dollar and adopt the yuan as the official currency of the territory when the renminbi is freely convertible.[13](the renminbi is not freely convertible.) However, in the same year, Rogers changed his position and believe the Hong Kong Government should adopt the renminbi even when it is non-freely convertible. "This is 2007; I don't know why the Hong Kong dollar exists any more.... You have a gigantic neighbor who is becoming the most incredible economy in the world."[14] Rogers also believes the renminbi is going to replace the US dollar as world reserve currency.[15]

Current HKD exchange rates
From Google Finance: AUD CAD CHF EUR GBP JPY USD INR CNY TWD
From Yahoo! Finance: AUD CAD CHF EUR GBP JPY USD INR CNY TWD
From XE.com: AUD CAD CHF EUR GBP JPY USD INR CNY TWD
From OANDA.com: AUD CAD CHF EUR GBP JPY USD INR CNY TWD
From fxtop.com: AUD CAD CHF EUR GBP JPY USD INR CNY TWD

Historical exchange rates[edit]

History of Hong Kong's Exchange Rate System
Period Exchange rate regime Features
1863–1935 Silver Standard Silver dollars as legal tender
December 1935 – June 1972 Sterling exchange Standard exchange rate:
  • £1:HK$16 (December 1935 – November 1967)
  • £1:HK$14.55 (November 1967 – June 1972)
July 1972 – November 1974 Fixed exchange rate against the US dollar Exchange rate:
  • US$1:HK$5.650 (June 1972 – February 1973)
  • US$1:HK$5.085 (February 1973 – November 1974)
November 1974 – October 1983 Free floating Exchange rates on selected days:
  • US$1:HK$4.965 (25 November 1974)
  • US$1:HK$9.600 (24 September 1983)
1983 – present Linked exchange rate system
  • US$1:HK$7.80 (1983–1998)

(for issue and redemption of Certificates of Indebtedness)

  • US$1:HK$7.75 (1998–2005)

(The HKMA undertakes to convert the HK dollars in licensed banks’ clearing accounts maintained with the HKMA into US dollars at the fixed exchange rate of HK$7.75 to US$1. The rate has been moving to 7.80 by 1 pip each calendar day starting from 1 April 1999 ending 12 August 2000.)

  • US$1:HK$7.75–7.85 (May 2005 onwards)

HKMA set up upper and lower guaranteed limit since 18 May 2005

See also[edit]

Numismatics[edit]

References[edit]

  1. ^ Triennial Central Bank Survey (April 2013), Bank for International Settlements.
  2. ^ "Hong Kong Currency (Local History Unit, Hong Kong Museum of History, 1993)". hk.history.museum. Retrieved 8 Jan 2012. 
  3. ^ "Hong Kong Monetary Authority, Annual Report 2005". 
  4. ^ http://www.hkma.gov.hk/eng/key-information/press-releases/2011/20111107-3.shtml
  5. ^ Joseph Yam's Viewpoint article, 18 November 1999, Joseph Yam's coin designs
  6. ^ Nachthund (7 January 2007). "Update – Hong Kong.". Retrieved 19 January 2007. 
  7. ^ HKMA (12 March 2007). "General Information on the Hong Kong Ten Dollar Polymer Note". Retrieved 13 March 2007. 
  8. ^ HKMA (23 June 2007). "Hong Kong Ten Dollar Polymer Note". Retrieved 25 June 2007. 
  9. ^ http://www.info.gov.hk/hkma/eng/press/2010/20100720e4_index.htm
  10. ^ "World’s Most Traded Currencies By Value 2012". http://www.investopedia.com/. Retrieved 10 June 2013. 
  11. ^ "Report on global foreign exchange market activity in 2013" (PDF). Triennial Central Bank Survey. Basel, Switzerland: Bank for International Settlements. April 2013. p. 12. Retrieved 22 October 2013. 
  12. ^ The total sum is 200% because each currency trade always involves a currency pair.
  13. ^ Osborne, Simon (13 Nov 2007). "Abolish the Hong Kong dollar," says Jim Rogers". Asian Inverstor (Hong Kong and the magic rainbow land: Asian Inverstor). Retrieved 1 April 2010. 
  14. ^ Scent, Benjamin (13 November 2007). "Rogers urges SAR to ditch HK dollar in yuan switch". The Standard. Retrieved 14 December 2007. 
  15. ^ "Jim Rogers sees Renminbi replacing US Dollar as world reserve currency". Midas Letter- Currencies (in English,cantonese) (Portland, OR, USA: BusinessIntelligence). 20 Jan 2009. Retrieved 1 April 2010. 

External links[edit]