The Past Of The Hong Kong Dollar

Published: 11th March 2010
Views: N/A

The History of the HKD

Formerly tied to the value of the British Pound, the Hong Kong Dollar, also known as HKD, was created in 1845. Back in 1971, the Hong Kong Dollar began a peg to the US Dollar, and this alteration caused changes in value which came after the Sterling zone's dismantling. No longer tied to any other country's currency value, the Hong Kong dollar floated on the open market for a while. But in 1983, Hong Kong again tied its dollar to the US Dollar in order to head off the deteriorating valuation which resulted from an era of political turmoil between China and Great Britain regarding the future of the city. Because of this, in order to issue HKD, banks are required to maintain the exact exchange value of US Dollars in their vaults, and this guarantees that the city's currency is reinforced by US Dollars. Even though Hong Kong's sovereign status reverted to that of a region of China in 1997, this currency system is still functioning even now.

Historical Conversion Rates of British Pound Sterling vs. the HKD

The Hong Kong dollar was naturally tied to the British Pound Sterling system at its inception since the city was a colony of the United Kingdom at the time, but this ended in the '70s when the currency was redirected and tied into the US dollar. From the 1940s through the 1960s, the exchange rate for the Hong Kong dollar was one of the steadiest in the world as it stayed level at .0625 GBP to HKD for the length of the time frame. From the end of the '60s through 1972 when it was unlinked from the Pound, the HKD had a slight improvement in conversion rates to .069 GBP to HKD. After switching to US dollar backing, the HKD increased quickly in value arriving at its ceiling in 1977 at .12 GBP to HKD. However, following the all-time high of 1977, the value of the currency began to erode and was particularly accelerated in the late 1980s when the relations between the United Kingdom and China soured over the future of the colony; there were many economic and monetary concerns for Hong Kong and the currency suffered.

Recent GBP vs HKD Currency Exchange Rates

Even though the city is technically a territory of China, Hong Kong enjoys a large degree of autonomy, and this freedom has been advantageous for their currency's exchange rates. The Hong Kong dollar has enjoyed a level of stability in the last decade that resembles its successes of previous decades. Following the return of Hong Kong to Chinese control in 1997, the Hong Kong dollar had a brief uptick against the British Pound Sterling, but since 2003 it has seen its value slowly and steadily erode against the Pound. Even though the rate is still decent, its 2007 level of .064 GBP to HKD was the lowest conversion rate for the Hong Kong dollar since 1967. In 2008, there were few signs of improvement due in large part to the onset of the economic downturn.


Tom is a writer for a range of travel publications. he recommends the FairFX
travel money
card for the best deal on currency when going abroad.

Report this article Ask About This Article

More to Explore