Hong Kong dollar

Hong Kong dollar
港元 or 港幣 (Chinese)
Coins of the Hong Kong dollar.
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	, 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	$0.1, $0.2, $0.5, $1, $2, $5, $10
Banknotes	$10, $20, $50, $100, $150 (limited), $500, $1,000
Printer	Issuing banks: HSBC Standard Chartered Bank of China Printer: Hong Kong Note Printing

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 proximate and their currencies have similar exchange rates.

Terminology

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 comes from of 緡 (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 元, 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 [tenths]"); 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

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)
• 䊆糈／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

Hong Kong dollar, 1866

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 = $15.36 to $16.45. 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 = £1 ($1 = 1s 3d).

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. 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 = £1 being restored. The yen was exchanged at a rate of ¥100 = $1. 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 1s 3d to 1s 4 ¹⁄₂d ($14.5455 = £1) 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 HK$5.65 = US$1. This was revised to HK$5.085 = US$1 in 1973. Between 1974 and 1983, the Hong Kong dollar was floated. On 17 October 1983, the currency was pegged at a rate of HK$7.8 = US$1, 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 HK$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 US$281.7 billion as of October 2011.^[4]

Coins

In 1863, 1-mil (¹⁄₁₀-cent), 1-cent and 10-cent coins were introduced, followed in 1866 by 5 and 20 cents, ¹⁄₂ 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 ¹⁄₂ and 1 dollar ceased in 1868, with only the ¹⁄₂ 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 cents 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 commemorative coin set which depicted Chinese cultural themes and hong Kong landmarks and 19 and 97 on each side of the designs.

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. They are Hongkong and Shanghai Banking Corporation Limited; the Standard Chartered Bank (Hong Kong) Limited; and the Bank of China (Hong Kong) Limited. 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 1,000-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]

In 2015, HSBC issued 150-dollar notes in celebration for its 150th anniversary.

Linked exchange rate system

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 ($)	87.0%
2	Euro	EUR (€)	33.4%
3	Japanese yen	JPY (¥)	23.0%
4	Pound sterling	GBP (£)	11.8%
5	Australian dollar	AUD ($)	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	Norwegian krone	NOK (kr)	1.4%
15	Singapore dollar	SGD ($)	1.4%
16	Turkish lira	TRY (₺)	1.3%
17	South Korean won	KRW (₩)	1.2%
18	South African rand	ZAR (R)	1.1%
19	Brazilian real	BRL (R$)	1.1%
20	Indian rupee	INR (₹)	1.0%
Other			6.3%
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.

Historical exchange rates

See also

• Economy of Hong Kong
• Tables of historical exchange rates to the United States dollar

Numismatics

• Krause, Chester L., and Clifford Mishler (1991). Standard Catalog of World Coins: 1801–1991 (18th ed.). Krause Publications. ISBN 0873411501. 
• Pick, Albert (1994). Standard Catalog of World Paper Money: General Issues. Colin R. Bruce II and Neil Shafer (editors) (7th ed.). Krause Publications. ISBN 0-87341-207-9. 

References

External links

• Hong Kong Banknotes—note: historic bills, not current
• History of Hong Kong Coins
• Historic Monthly Exchange Rate of HKD since 1975
• SinoBanknote (Chinese) (English)
• Historical banknotes of Hong Kong (English) (German)