Record of discussion of meeting of Exchange Fund Advisory Committee Currency Board Sub-Committee held on October 20
The following is issued on behalf of the Hong Kong Monetary Authority:
(Approved for issue by the Exchange Fund Advisory Committee by circulation)
Report on Currency Board Operations (June 21 – October 8, 2025)
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The Currency Board Sub-Committee (Sub-Committee) noted that the Hong Kong dollar (HKD) traded within a range of 7.7705 - 7.8500 against the US dollar (USD) during the review period. The HKD stayed close to the weak-side Convertibility Undertaking (CU) between mid-June and mid-August, and the weak-side CU was triggered 12 times during the review period. With the HKMA buying HK$119.95 billion under the weak-side CU, the Aggregate Balance fell correspondingly to around HK$54 billion. Since mid-August, the HKD had strengthened as short-term HKD interbank rates (HIBORs) firmed and net buying flows through Southbound Stock Connect continued. While HIBORs generally tracked their USD counterparts under the Linked Exchange Rate System, they were also influenced by the local supply and demand of HKD funding. Amid the reduction in the Aggregate Balance, HIBORs picked up since mid-August and the negative HKD-USD interest rate spread narrowed. Meanwhile, following the decrease in the target range for the US federal funds rate in mid-September, many banks reduced their Best Lending Rates by 12.5 basis points, and the Best Lending Rates in the market ranged from 5.125 per cent - 5.625 per cent at the end of the review period. No abnormality was noted in the usage of the Discount Window. Overall, the HKD exchange and interbank markets continued to trade in a smooth and orderly manner.
The Sub-Committee noted that the Monetary Base decreased to HK$2,020.69billion at the end of the review period. In accordance with the Currency Board principles, all changes in the Monetary Base had been fully matched by changes in foreign reserves.
The Report on Currency Board Operations for the review period is atAnnex.
Monitoring of Risks and Vulnerabilities
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The Sub-Committee noted that the US economy showed signs of softening amid higher tariffs, with inflation rising on the one hand and labour demand losing momentum on the other. Meanwhile, market concerns over fiscal and policy developments had affected long-term US Treasury bond yields. The recent US government shutdown added further uncertainty to the US economic outlook. While Asia recorded resilient growth in the first half of 2025, lingering trade policy uncertainty and the potential effects of direct and indirect US tariffs on the broader region would continue to weigh on Asia's integrated supply chain networks.
The Sub-Committee noted that in the Chinese Mainland, growth momentum moderated in Q3. The near-term economic outlook was clouded by various uncertainties and risks, such as additional tariffs and their repercussions on global trade, as well as renewed softness in the local housing market.
The Sub-Committee noted that in Hong Kong, the economy maintained solid growth in Q2 on the back of strong exports performance and improved domestic demand. Looking ahead, the Hong Kong economy was expected to sustain moderate growth, driven by various factors such as government support, the Mainland's economic stimulus measures, and stabilising asset markets. The housing market stabilised further alongside strengthened market sentiment, whereas the commercial real estate markets continued to face challenges of high vacancy rates.
Updates on Interbank Liquidity and Interbank Interest Rates
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The Sub-Committee received an update on the relationship between HKD interbank liquidity and interbank interest rates, incorporating recent market observations and insights.
Source: AI-found images
Re-launch of Reporting Scheme for Unauthorised Building Works in New Territories Exempted Houses
Following the direction of earlier proposals, the Buildings Department (BD) announced today (April 1) the re-launch of the Reporting Scheme for Unauthorised Building Works (UBWs) in New Territories Exempted Houses (NTEHs). The reporting period will last for one year from April 1, 2026 to March 31, 2027.
"In view of the history and unique circumstances of the NTEHs (commonly known as village houses), the Government launched a one-off administrative reporting scheme in 2012 as a special arrangement. Under the scheme, owners could report to the BD about UBWs that were erected before June 28, 2011, posed lower risks or constituted less serious contravention of the law. The reporting period ended in December 2012. The Development Bureau (DEVB) put forward proposals to amend the Buildings Ordinance in December 2024, which included rationalising the policy for handling UBWs. The DEVB also pointed out that in response to the views of villagers and Legislative Council members that the reporting period was too short, the Government prepared to re-launch the Reporting Scheme to allow owners who at that time did not report their UBWs to do so," a spokesman for the BD said.
Relevant stakeholders and Legislative Council members generally considered the above proposals practical and feasible, and they welcomed the proposals. The DEVB and the BD have also consulted Heung Yee Kuk on the relevant implementation arrangements.
The re-launched Reporting Scheme will maintain the original criteria, including:
(1) The types of UBWs that can be reported and their erection dates are the same as the original Reporting Scheme, meaning that only UBWs erected before June 28, 2011, posed lower risks or constituted less serious contravention of the law and were not the First Round Targets (Note) are eligible. Examples include signboards projecting from the external walls of village houses; enclosed rooftop structures with a coverage of not more than 50 per cent of the roofed-over area of the main building.
(2) Same as the original Reporting Scheme, owners are required to conduct safety inspections on the reported UBWs every five years.
"The BD will not require the immediate removal of the reported UBWs unless their structures become obviously dangerous. Regarding UBWs in village houses, the BD is prioritising the handling of First Round Targets. If any relevant UBWs remain not reported after the application deadline of March 31, 2027, the BD will, after dealing with the First Round Targets, take priority enforcement action against the non-reported UBWs. The BD will formulate enforcement strategy for the reported UBWs at a later stage in accordance with the risks and the actual situation," the spokesman added.
To enhance the efficiency of processing applications, reports must be submitted via the electronic platform on the BD's website by technically competent persons or registered professional engineers appointed by owners. In accordance with the user-pays principle, an administrative fee of $600 is payable for each application. Upon successful reports, owners must also pay the relevant administrative fee when conducting safety inspections of the reported UBWs every five years.
Details of the re-launched Reporting Scheme are available on the BD's website at https://www.bd.gov.hk/en/safety-inspection/ubw/UBW-in-new-territories-exempted-houses/index_relaunch_reporting_scheme.html; Villagers who wish to report can call 2626 1616 for enquiry. The BD will also use different channels such as distributing leaflets and posters to Rural Committees to enable villagers to know more about the re-launch of the Reporting Scheme.
Owners who had successfully participated in the Reporting Scheme in 2012 are not required to submit reports again. However, they must continue to comply with the requirements of the original Reporting Scheme, including conducting safety inspections of the reported UBWs every five years, submitting safety certificates and paying administrative fees to the BD.
Note: The First Round Targets refer to UBWs with higher potential risks and more serious nature, such as village houses of four storeys or more, and enclosed rooftop structures covering more than 50 per cent of the roofed-over area.
Source: AI-found images
