What does the Exchange Fund primarily regulate in regards to the Hong Kong dollar?

The Exchange Fund primarily regulates the value of the Hong Kong dollar by maintaining its stability against the US dollar through a linked exchange rate system. This system ensures that the Hong Kong Monetary Authority (HKMA) manages monetary policy with the overarching goal of stabilizing the currency's value. The HKMA intervenes as needed in the foreign exchange market to defend the peg, responding to fluctuations in supply and demand for the Hong Kong dollar.

While circulation, use, and popularity of the currency play roles in the overall monetary framework, they are not the primary focus of the Exchange Fund’s regulatory functions. The emphasis is squarely on maintaining the dollar's value to foster confidence in the currency and ensure economic stability.