As is common with British colonies at the time, the UK tried to implement a coinage system complying with the UK Pound Sterling. This meant that the coins used in Hong Kong at that time, being mainly Mexican and Spanish "8 real's" where said at a value of 4 shilling and 2 pence. The problem was that just as in other parts of the world where the British Empire had colony's, Hong Kong was not thrilled about this system.
In 1860, which was about 15 years after introducing the Sterling coinage system, the British Empire saw it was not working and they established the Hong Kong Mint which was thereafter making Dollar coins for usage in Hong Kong. This process started in 1863. It was stopped only 5 years later as the Chinese did not like the coins, which were similar to the Mexican and Spanish coins used for almost 50 years before that.
By 1873 there was a silver crisis which resulted in the Hong Kong Dollar being devaluated as it was linked to the "gold standard" of the American Dollar. Because of this and other reasons there was still a huge influx of Spanish and Mexican coins and under pressure from Hong Kong authorities the British government had to do something about it.
British trade dollars where minted in Bombay and Calcutta and used as legal tender in Hong Kong. In 1906 there was, however, another change as other parts of British Asia started issuing their own Dollars. Until 1935, only China and Hong Kong where still using silver Dollars and they stopped using them altogether in the same year. In that year the rate of the Hong Kong Dollar against the Sterling Pound was set at 15,36 to 16,45 to 1.
In 1939 this rate was fixed at 16HK$ to 1 Pound Sterling . During the War the only legal tender, because of the occupation by Japan, was the Japanese Yen, but straight after the liberation all usage of the Yen was prohibited.
During the devaluation period of the Pound Sterling, in 1967, the value of the Hong Kong Dollar was set at 14,54 to 1 instead of the rate of 16 to 1 used after the Second World War. Only a few years later, in 1972, the Hong Kong currency was pegged to the US$ at a rate of 5.655 H.K Dollar to US $1. 10 Years later the rate had increased to 7.8 Hong Kong Dollars to 1 US$.
In 2005 the last change came about when the upper and lower limits where put in place. The HK Dollar was set to a rate between 7,75 and 7,8 to 1.
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