HKMA buys HK$3.054 billion from market as currency weakens, aggregate balance below HK$100 billion mark

HONG KONG (Reuters) - Hong Kong's de-facto central bank bought HK$3.054 billion ($389.1 million) from the market in New York trading hours to stop the local currency from breaking below its peg to the U.S. dollar.

The action will bring the aggregate balance - the key gauge of cash in the banking system - below HK$100 billion. It will decrease to HK$96.977 billion on Tuesday, a Hong Kong Monetary Authority (HKMA) spokeswoman said on Saturday.

The Hong Kong dollar is pegged to a tight band of between 7.75 and 7.85 versus the U.S. dollar.

While analysts and other market participants have been watching the balance approach the HKD$100 billion mark with a view on potential market stresses, the immediate impact seems to be on interest rates.

The HKMA has bought Hong Kong dollars worth about US$30.7 billion from the market through 40 rounds of intervention since the Federal Reserve began raising rates in March. Its intervention has boosted local yields alongside those on U.S. dollar assets.

($1 = 7.8493 Hong Kong dollars)

(Reporting by Donny Kwok; Editing by William Mallard)