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Hong Kong dollar edges closer to decade low

The Hong Kong dollar was again flirting with a decade-low as it weakened against its US counterpart two weeks after the city’s de facto central bank moved to shore up the currency.

The currency edged further into the weaker end of its tightly pegged trading range of between HK$7.75 and HK$7.85 against the US dollar, softening to HK$7.8264 on Wednesday.

This move puts the Hong Kong dollar closer to the decade-low it reached in January 2016 at HK$7.8295.

The currency strengthened sharply earlier this month after the Hong Kong Monetary Authority sold HK$40bn in additional exchange fund bills on August 9, a move allowing it to effectively mop up excess cash in the banking system.

The currency has now crept back towards the level seen before the HKMA took action.