According to Chinese media reports, US rate hikes won't impact Hong Kong's currency or financial stability, and the aggregate balance of the city's banking system is stable.

A Hong Kong Monetary Authority (HKMA) spokesperson said the HKMA's aggregate balance declined to HK$49.23 billion on Thursday, the lowest level since 2008, Global Times reports. 

The aggregate balance is the sum of the balances in clearing accounts held by banks with the HKMA, gauging interbank liquidity. 

The decline in this balance has fuelled investor fears over Hong Kong's currency peg and the economy's overall health.

Earlier in the week, the growing gap between local and global interest rates led to sustained carry trades and weakness in the HK Dollar, South China Morning Post reports.

Back in 1983, Hong Kong adopted the Linked Exchange Rate System (LERS), ensuring that the HK Dollar exchange rate remains stable within a range of HK$7.75-7.85 per US$1.

The HKMA sells and buys the local currency to hold the exchange rate within this range. On Wednesday this week. The HKMA purchased around HK$6.9 billion to bolster the currency, the 48th such move since May last year.

"The overall aggregate balance in Hong Kong's banking system is stable, and cash flowing out of the Hong Kong Dollar doesn't necessarily mean it's flying out of the Hong Kong financial market," according to the spokesperson.

The aggregate balance is part of Hong Kong's monetary base, and the level won't impact the efficiency of the LERS mechanism, the Global Times report adds.

The HKMA spokesperson said the authority would adjust the issuance of exchange fund bills and bonds by considering several factors, such as market demand.