Capital has rushed into the Asian financial hub in 2020, drawn in by comparatively high interest rates and a series of large initial public offerings, analysts said.
Upcoming IPOs including Ant Group's looming $35 billion joint listing in Hong Kong and Shanghai are expected to keep demand for Hong Kong dollars high.
The Hong Kong Monetary Authority (HKMA) sold HK$10.9 billion ($1.41 billion) on Tuesday in interventions during Hong Kong and U.S. trading hours.
That brings the total sold so far this year to HK$230.6 billion, beating the HK$227 billion for the full year of 2015, which was previously the highest since 2009, according to official data and Reuters calculations.
This is a sharp turnaround from 2019, when some feared political uncertainty would drive money out of Hong Kong.
The Hong Kong dollar is pegged in a narrow range of 7.75-7.85 to the U.S. dollar. When it weakens to HK$7.85 a dollar, the HKMA buys Hong Kong dollars from the market, as it did in 2018 and 2019.
When it strengthens to HK$7.75, the HKMA sells Hong Kong dollars.
Analysts warn those inflows could reverse if the United States issued further sanctions on financial institutions or individuals based in the territory due to Washington's concerns about the curtailment of political freedoms in Hong Kong.
"Trump has been coming under heavier pressure to regain momentum in his re-election bid and is tempted to impose sanctions on Hong Kong," said Ken Cheung, chief Asian FX strategist at Mizuho Bank. "Any move to undermine market confidence in the USD-HKD peg or HK's international financial centre status will disrupt capital flows."
Carie Li, economist at OCBC Wing Hang Bank in Hong Kong, said the factors driving the inflows had varied throughout 2020.
"Back in April it was about the 'carry trade' as the Federal Reserve cut rates to nearly zero, but Hong Kong interest rates did not follow the trend immediately," she said.
This meant traders sold U.S. dollars for Hong Kong dollars to benefit from the better rates.
"At the end of June, there were strong equity inflows...and then a very strong IPO pipeline which resulted in very strong HK dollar demand," Li said.
($1 = 7.7500 Hong Kong dollars)
(Reporting by Alun John; Editing by Sam Holmes)
By Alun John