Hong Kong interest rates fall despite currency's US dollar peg

HONG KONG -- Interest rates in Hong Kong have fallen despite a monetary mechanism that pegs the city's currency to the U.S. dollar, as investors shun carry trades amid declining confidence in the greenback.

The peg system lets the Hong Kong dollar fluctuate between 7.75 and 7.85 per U.S. dollar. When the upper or lower limit is reached, the Hong Kong Monetary Authority (HKMA), the central bank, intervenes in the market to keep the currency in the set range.