HONG KONG (Mar 11): Hong Kong faces the likelihood of rising borrowing costs after the city’s de facto central bank intervened to defend its currency peg for the first time since August.

The Hong Kong Monetary Authority bought HK$1.51 billion ($260 million) of local dollars during London and New York trading hours after the currency fell to the weak end of its trading band, it said in a statement Saturday. The move will reduce the aggregate balance, a measure of interbank liquidity, to a decade low of HK$74.8 billion.

While the size of the buying was small relative to some of the HKMA’s interventions last year, continued weakness in the currency may prompt the central bank to drain more liquidity. That would intensify pressure on home values in the world’s most expensive property market, and weigh on the city’s economy. Just 11 months ago the aggregate balance stood at about HK$180 billion.

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