Hong Kong dollar facts for kids

The Hong Kong dollar (Chinese: 港元, sign: HK$; code: HKD) is the official money of Hong Kong. It is split into 100 cents. A long time ago, it was also split into 1000 mils. The Hong Kong Monetary Authority (HKMA) is like the central bank for Hong Kong and its dollar.

Three banks in Hong Kong are allowed by the HKMA to print their own banknotes. These banks are HSBC, Bank of China, and Standard Chartered. They print banknotes in amounts of HK$20, HK$50, HK$100, HK$150, HK$500, and HK$1000. The HK$10 banknote and all coins are made by the Government of Hong Kong.

As of April 2019, the Hong Kong dollar was the ninth most traded currency in the world. Hong Kong uses a special system called a linked exchange rate system. This means its value is tied to the U.S. Dollar. Since May 2005, US$1 is usually worth between HK$7.75 and HK$7.85.

Besides Hong Kong, the Hong Kong dollar is also used in nearby Macau. It's usually worth about 1.03 Macanese patacas and is often accepted there for shopping.

History of Hong Kong's Money

When Hong Kong became a trading port in 1841, there wasn't a local currency. People used money from other countries, like Indian rupees, Spanish or Mexican dollars, and Chinese cash coins. The British government tried to introduce their own money, but people in Hong Kong preferred the silver dollars that were already common in Asia.

Early Attempts at Local Currency

By the 1860s, the British realized they couldn't force their currency on Hong Kong. So, in 1863, the Royal Mint in London started making special coins for Hong Kong. In 1866, a local mint was built in Hong Kong to make silver dollar coins. However, people didn't like these new Hong Kong dollars, and the mint closed in 1868. Its machines were later sold and used to make the first Yen coins in Japan.

In the 1860s, new British banks like the Hong Kong and Shanghai Banking Corporation and the Chartered Bank of India, Australia and China started printing their own dollar banknotes. These were used in Hong Kong and other nearby areas.

Changes in the Early 1900s

By 1895, there weren't enough Spanish/Mexican dollars. So, new British trade dollars were made in India for Hong Kong and other British colonies. In 1906, another colony, the Straits Settlements, made its own dollar and tied its value to the British pound. This was different from Hong Kong's money.

Until 1935, Hong Kong and China were still using the silver standard. This meant their money's value was tied to silver. In 1935, Hong Kong stopped using silver and instead tied its dollar to the British pound. This was when the Hong Kong dollar truly became its own currency. The government started issuing one-dollar notes, and by 1937, all money in Hong Kong was officially unified. In 1939, the Hong Kong dollar was set at a fixed rate of HK$16 to £1.

Money During World War II

During the Japanese occupation, the Japanese military yen became the only money used. At first, ¥1 yen was worth HK$2, but later it changed to HK$4 for ¥1 yen. After the war, Hong Kong went back to its old money system, and the pre-war exchange rate of HK$16 to £1 was restored.

After World War II

Silver coin: This 1 dollar coin from 1867 was one of the first official coins of British Hong Kong.

Silver coin: The British Trade Dollar was used in Hong Kong from 1895 to 1935.

After World War II, the Hong Kong dollar was again tied to the British pound. The UK tried to keep its currency, the pound, strong. Hong Kong was part of this system, but it also traded a lot with China. This meant Hong Kong had a special way of handling its money, even if it was technically against some rules.

The Pound's Value Changes

In 1967, the British pound lost some of its value. Because the Hong Kong dollar was tied to the pound, its value also changed. This caused some problems for Hong Kong, as it had a lot of its savings in British pounds. To help, London agreed to protect Hong Kong from future drops in the pound's value.

Floating Currency System (1974–1983)

In 1971, the US dollar was no longer tied to gold. Then, in 1972, Britain changed its exchange rules. In 1972, the Hong Kong dollar was tied to the U.S. dollar at HK$5.65 to US$1. This changed to HK$5.085 to US$1 in 1973. From 1974 to 1983, the Hong Kong dollar was allowed to float, meaning its value changed freely based on the market.

Linked Exchange Rate System (Since 1983)

On October 17, 1983, the Hong Kong dollar was officially tied to the U.S. dollar at HK$7.8 = US$1. This was done to bring back confidence in Hong Kong's money. Before this, in September 1983, the Hong Kong dollar's value dropped a lot, causing panic. An economist named John Greenwood suggested tying the Hong Kong dollar to the U.S. dollar, and this idea was accepted.

The rate of HK$7.8 was chosen to show that things were stable again. This system has continued even after Hong Kong became part of China in 1997.

After 1997

The laws of Hong Kong say that it can manage its own money. The Hong Kong dollar is issued by the government and three banks, overseen by the Hong Kong Monetary Authority (HKMA). This authority acts like Hong Kong's central bank.

Banks can only issue Hong Kong dollars if they have the same amount in U.S. dollars saved up. This system makes sure that Hong Kong's money is always backed by U.S. dollars. Hong Kong has a very large amount of U.S. dollars saved, which helps keep its currency strong.

Since May 2005, the HKMA has set a range for the Hong Kong dollar's value against the U.S. dollar, between HK$7.75 and HK$7.85. This helps keep the currency stable and prevents people from using it to guess about the value of the Chinese money (renminbi).

Words for Money

In formal Cantonese, people use 圓 or 元 (yùn) for dollar. In everyday Cantonese, 蚊 (mān) is used. This word comes from an old Chinese money unit.

The dollar is divided into 100 cents. The word 仙 (sīn) is used for cent, which sounds like "cent." However, cents are mostly used in the stock market now because their value is so small. Ten cents is called 1 hou (毫) in Cantonese.

When saying prices in everyday Cantonese, like HK$7.80, you might hear 七個八 (chāt go baat), meaning "seven units eight." For HK$6.75, it's 六個七毫半 (luhk go chāt hòu bun), meaning "six units and seven dime half."

Slang Terms for Money

In Hong Kong, people use fun slang words for different amounts of money:

Sometimes, people from other countries who speak Chinese also use these terms for their local money.

Coins of Hong Kong

In 1863, Hong Kong started making 1-mil (1⁄10-cent), 1-cent, and 10-cent coins. Later, 5-cent, 20-cent, half-dollar, and 1-dollar coins were added. The 1-mil and 1-cent coins were made of bronze, and the 1-mil had a hole in the middle. The other coins were silver. Over time, some coins stopped being made, and new materials were used, like cupro-nickel and nickel-brass.

In 1960, 1-dollar coins made of cupro-nickel were introduced. Later, 20-cent, 2-dollar, and 5-dollar coins were added. In 1994, a special 10-dollar coin was introduced, made of two different metals.

Since 1993, coins with Queen Elizabeth II's picture have slowly been taken out of circulation. Most coins now show Hong Kong's special flower, the Bauhinia, or other symbols. Coins with the Queen's picture are still valid, but you don't see them as often. The new designs were created by Joseph Yam, who was in charge of the Hong Kong Monetary Authority.

In early 1997, to celebrate Hong Kong becoming part of China, a special set of coins was made. These coins showed Chinese culture and Hong Kong landmarks.

Today, the Hong Kong Monetary Authority issues coins for HK$10, HK$5, HK$2, HK$1, 50 cents, 20 cents, and 10 cents.

Banknotes of Hong Kong

Banknotes circulated by the three different note issuers, 2020      The Hongkong and Shanghai Banking Corporation (56%)     Bank of China (Hong Kong) (33.90%)     Standard Chartered Hong Kong (10.1%)

The Hong Kong Monetary Authority (HKMA) manages how Hong Kong dollar banknotes are issued. Three commercial banks are allowed to print their own banknotes for general use. These are HSBC, the Bank of China (Hong Kong), and the Standard Chartered Bank (Hong Kong). The HKMA also issues some notes itself. This system is unusual because in most countries, only one central bank prints all the money.

Today, the three commercial banks print banknotes in amounts of HK$20, HK$50, HK$100, HK$500, and HK$1,000. The HK$10 banknote is only issued by the Hong Kong Monetary Authority on behalf of the Government of Hong Kong. This means there are four different groups that issue banknotes in Hong Kong.

The first private bank, the Oriental Bank, started in 1845. But banknotes weren't made until the 1860s. Back then, notes came in amounts like 1, 5, 10, 25, 50, 100, and 500 dollars. The government did not accept these notes for taxes at first.

In 1935, a new law made banknotes of 5 dollars and more from the three main banks official money. The government started printing 1 dollar notes. During World War II, the government also printed 1-cent, 5-cent, and 10-cent notes because it was hard to get coins to Hong Kong.

After the war in 1945, money production went back to normal. The government issued small notes (1 cent, 5 cents, 10 cents, 1 dollar), and the banks issued larger notes (5, 10, 50, 100, 500 dollars). In 1960, coins replaced 1-dollar notes.

In 1975, HK$5 notes were replaced by coins. In 1977, HK$1,000 notes were introduced. In 1985, HK$20 notes came out. In 1993, HK$10 coins were introduced, and banks stopped printing HK$10 notes. In 1994, the Bank of China was also allowed to issue notes.

On January 1, 1993, the three main banks introduced new banknote designs.

After trying to switch the HK$10 from a banknote to a coin, the HKMA now issues the HK$10 note itself. These notes were first printed on paper in 2002 and then on plastic since 2007. Older HK$10 banknotes are still valid, even if they are rare.

The newest series of banknotes started in 2018. Special commemorative banknotes have also been made to celebrate bank anniversaries and the Olympic Games.

How Hong Kong's Money Works

The Linked Exchange Rate System

HKD/USD exchange rate since 1990

Since 1983, the Hong Kong dollar has been tied to the United States dollar at a fixed rate of HK$7.80 = US$1. This is a special system. The Hong Kong Monetary Authority (HKMA) allows three banks to print new banknotes. But these banks must deposit the same amount of U.S. dollars with the HKMA.

The HKMA makes sure the exchange rate stays fixed at HK$7.80 to US$1. If the Hong Kong dollar gets too strong, the HKMA will increase the supply of Hong Kong dollars. If it gets too weak, they will reduce the supply. This keeps the rate stable.

Because of this system, the Hong Kong dollar is backed by a huge amount of foreign exchange reserves. These reserves are more than seven times the amount of money in circulation. This makes the Hong Kong dollar very strong and stable.

Debate About Tying to Chinese Money

Sometimes, people talk about tying the Hong Kong dollar to the Chinese money, the Renminbi, instead of the U.S. dollar. This is because Hong Kong's economy is very connected to mainland China.

However, changing the peg would be a huge task. Hong Kong would need a lot of Renminbi to back its currency. Also, the Renminbi's value can change a lot, which could make Hong Kong's money less stable. In 2016, when the Renminbi's value changed quickly, it affected Hong Kong's markets. The HKMA has said it will protect the current linked exchange rate system.

Exchange Rates

Current Exchange Rates

Past Exchange Rates

Most traded currencies by value
Currency distribution of global foreign exchange market turnover

Rank	Currency	ISO 4217 code (symbol)	% daily share (April 2016)
1	United States dollar	USD ($)	87.6%
2	Euro	EUR (€)	31.4%
3	Japanese yen	JPY (¥)	21.6%
4	Pound sterling	GBP (£)	12.8%
5	Australian dollar	AUD ($)	6.9%
6	Canadian dollar	CAD ($)	5.1%
7	Swiss franc	CHF (Fr)	4.8%
8	Chinese yuan	CNY (¥)	4.0%
9	Swedish krona	SEK (kr)	2.2%
10	New Zealand dollar	NZD ($)	2.1%
11	Mexican peso	MXN ($)	1.9%
12	Singapore dollar	SGD ($)	1.8%
13	Hong Kong dollar	HKD ($)	1.7%
14	Norwegian krone	NOK (kr)	1.7%
15	South Korean won	KRW (₩)	1.7%
16	Turkish lira	TRY (₺)	1.4%
17	Russian ruble	RUB (₽)	1.1%
18	Indian rupee	INR (₹)	1.1%
19	Brazilian real	BRL (R$)	1.0%
20	South African rand	ZAR (R)	1.0%
Other			7.1%
Total Most traded currencies by value Currency distribution of global foreign exchange market turnover Rank Currency ISO 4217 code Symbol or abbreviation Proportion of daily volume, April 2019 Proportion of daily volume, April 2022 1 U.S. dollar USD US$ 88.3% 88.5% 2 Euro EUR € 32.3% 30.5% 3 Japanese yen JPY ¥ / 円 16.8% 16.7% 4 Sterling GBP £ 12.8% 12.9% 5 Renminbi CNY ¥ / 元 4.3% 7.0% 6 Australian dollar AUD A$ 6.8% 6.4% 7 Canadian dollar CAD C$ 5.0% 6.2% 8 Swiss franc CHF CHF 5.0% 5.2% 9 Hong Kong dollar HKD HK$ 3.5% 2.6% 10 Singapore dollar SGD S$ 1.8% 2.4% 11 Swedish krona SEK kr 2.0% 2.2% 12 South Korean won KRW ₩ / 원 2.0% 1.9% 13 Norwegian krone NOK kr 1.8% 1.7% 14 New Zealand dollar NZD NZ$ 2.1% 1.7% 15 Indian rupee INR ₹ 1.7% 1.6% 16 Mexican peso MXN $ 1.7% 1.5% 17 New Taiwan dollar TWD NT$ 0.9% 1.1% 18 South African rand ZAR R 1.1% 1.0% 19 Brazilian real BRL R$ 1.1% 0.9% 20 Danish krone DKK kr 0.6% 0.7% 21 Polish złoty PLN zł 0.6% 0.7% 22 Thai baht THB ฿ 0.5% 0.4% 23 Israeli new shekel ILS ₪ 0.3% 0.4% 24 Indonesian rupiah IDR Rp 0.4% 0.4% 25 Czech koruna CZK Kč 0.4% 0.4% 26 UAE dirham AED د.إ 0.2% 0.4% 27 Turkish lira TRY ₺ 1.1% 0.4% 28 Hungarian forint HUF Ft 0.4% 0.3% 29 Chilean peso CLP CLP$ 0.3% 0.3% 30 Saudi riyal SAR ﷼ 0.2% 0.2% 31 Philippine peso PHP ₱ 0.3% 0.2% 32 Malaysian ringgit MYR RM 0.1% 0.2% 33 Colombian peso COP COL$ 0.2% 0.2% 34 Russian ruble RUB ₽ 1.1% 0.2% 35 Romanian leu RON L 0.1% 0.1% … Other 2.2% 2.5% Total 200.0% 200.0% || style="text-align:right;" | 200.0%

See also

• Economy of Hong Kong
• Hong Kong Monetary Authority