The Hong Kong dollar is testing the strong end of its currency band.
That is, HKD strengthening against the USD (USD/HKD lower as you can see below)
HKMA is injecting HKD into the banking system to defend the bottom of the band.
- when the aggregate balance expands (funds injected like the HKMA is doing), then local interest rates fall. Lower rates reduce the incentive for investors to buy the Hong Kong dollar.
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The Hong Kong Monetary Authority (HKMA) is Hong Kong's currency board and works as the central bank.
The linked exchange rate is kept between 7.75 and 7.85 per USD.
