HKMA sells HK$3.875 bln to keep HK dlr in trading band

HONG KONG, Nov 24 - Hong Kong's central bank, the Hong Kong Monetary Authority , on Tuesday morning injected HK$3.875 billion into the money market to stem an appreciating Hong Kong dollar <HKD=> and keep it within its fixed trading band.

This followed a HK$2.325 billion intervention by the HKMA on Monday.

The Hong Kong dollar hit the top of its trading band at 7.7500 on Tuesday as money poured into the territory.

Hong Kong has seen massive capital inflows in recent months as a weak U.S. dollar and very low interest rates make asset prices attractive and on market expectations that China could soon resume appreciation of its yuan currency <CNY=CFXS>. According to data on Reuters page <HKMAOOC>, the latest intervention will lift the aggregate balance -- the sum of balances on clearing accounts maintained by banks with the HKMA -- to HK$312.196 billion by Nov. 27.

The Hong Kong dollar is pegged at 7.80 to the U.S. dollar, but can trade between 7.75 and 7.85 to the U.S. dollar.

Under the linked exchange rate mechanism, the HKMA is obliged to intervene in the market to keep the trading band intact if the currency hits 7.75 or 7.85.

By 0248 GMT, it was quoted at 7.7500/01. (Reporting by Christina Lo and Susan Fenton; Editing by Jonathan Hopfner) ((christina.lo.reuters.com@reuters.net; +852 2843 6960; Reuters Messaging:christina.lo.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))