(Bloomberg) — Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg.

The Hong Kong Monetary Authority sold a record HK$60.5 billion ($7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page Tuesday in Asia, after it tested the upper end of its trading band. That adds to the HK$56.1 billion of sales versus the greenback since Friday.

The rapid intervention signals efforts from the city’s authorities to limit the currency’s moves within its 7.75-7.85 per dollar trading band. Asian currencies are clocking in unprecedented gains on hopes the world’s two largest economies will reach a truce on trade and as doubts over US exceptionalism pummel the dollar.

Heavy sales of the local dollar by the HKMA helped dampen Hong Kong’s borrowing rates that were elevated amid demand for the currency to subscribe shares of Contemporary Amperex Technology Co. Ltd, which is expected to be the city’s biggest listing in years. Lower borrowing costs may also help shield Hong Kong’s economy that’s vulnerable to US tariffs.

The HKMA’s Hong Kong dollar sales “may help buffer potential liquidity tightness at an upcoming IPO, together with other inflows,” said Frances Cheung, head of FX and rates strategy at Oversea-Chinese Banking Corp. She sees the currency peg resulting in a relatively soft Hong Kong dollar compared with peers in times of greenback weakness.

Demand for Hong Kong dollars in the capital market has been high of late as Chinese investors poured money in Hong Kong stocks this year. Currency conversions related to dividend payments by Chinese companies listed in Hong Kong added to demand for the local currency.

Before Friday, the last time the HKMA intervened to cap the currency’s gains was in 2020. In comparison, it has stepped into the market in 2022 and 2023 to put a floor under the currency when it threatened to breach the weak end of its trading band.

Hong Kong set up the currency peg in 1983 to arrest a plunge triggered by concern over talks to hand over the British colony to China. The trading band was widened in 2005 to what it currently is.

The recent HKMA interventions are also expected to drive up its aggregate balance, a measure of interbank liquidity, providing more firepower to authorities to defend the currency in episodes of weakness. The gauge was hovering near the lowest level since 2008, after the HKMA sold US dollars to defend the peg.

The accumulated intervention amount this time around is likely to overtake the HK$383.5 billion recorded in 2020 after the Covid outbreak, Bloomberg Intelligence strategist Stephen Chiu and Chunyu Zhang wrote in a note.

The one-month Hong Kong Interbank Offered Rate fell to 3.66% on Tuesday following HKMA’s interventions, the lowest in two weeks.

The recent rally in currencies of trade-dependent Asian economies is causing headaches for policymakers. While currency strength can help attract foreign inflows and make imports cheaper, it may hurt exporters by making their goods less competitive globally.

The Taiwan dollar’s surge by the most in four decades prompted the island’s central bank to say on Monday that it would step into the foreign-exchange market if stability was threatened.

As for the Hong Kong dollar, Citigroup Inc. expects HKMA interventions to continue. “We expect further intervention on the strong side of the trading band given greenback weakness trend may have more room to run,” strategist Adrienne Lui wrote in a note.

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