An employee counts Hong Kong dollars at a local bank in Huaibei, East China's Anhui Province on Thursday. Photo: CFP

Downward pressure on Hong Kong's currency and stock market continued on Thursday, raising investors' concerns over the current exchange rate system in Hong Kong.

As of 10:30 pm on Thursday, the spot Hong Kong dollar rate was 7.8187 against the US dollar, according to Bloomberg Business.

The Hang Seng Index fell 1.8 percent to 18,542.15 points on Thursday, while the China Enterprises Index slumped 2.2 percent to 7,835.64 points.

The Hong Kong currency fell as low as HK$7.8242 versus the US dollar on Wednesday, the weakest level in more than eight years and close to the limit allowed under the current system.

Under the linked exchange rate system, which has been in place since 1983, the Hong Kong dollar is allowed to trade between 7.75 and 7.85 against the US dollar.

The underperformance of the Hong Kong dollar recently has caused investors to speculate about the possibility of the long-running peg to the US dollar being abandoned, but the government of the Hong Kong Special Administrative Region (HKSAR) has said it has no intention of changing the system.

Hong Kong Monetary Authority Chief Executive Norman Chan reiterated his commitment to maintaining the current linked exchange rate system, according to Bloomberg on Wednesday.

The IMF also reiterated its continued support for the system, according to a statement released by the Hong Kong Monetary Authority Wednesday.

The HKSAR government will keep a close watch "on the external financial conditions and ensure the normal functioning of Hong Kong's financial system," the Monetary Authority said on Wednesday.

HK dollar depreciation

"The downsides of pegging the Hong Kong dollar to the US dollar have come into focus this year, with the peg implying increasing interest rates, in tandem with the US Federal Reserve, and an appreciation in the Hong Kong dollar against most currencies [in particular against the yuan], which could be at odds with an economy and financial system that is under pressure from slowing demand from China and falling property and equity prices," Marie Diron, SVP of the Sovereign Risk Group at Moody's, told the Global Times Thursday.

Also, investors' concerns over economic growth in the Chinese mainland have contributed to pressure on the Hong Kong currency, as Hong Kong has strong connections with the mainland in many aspects, including commodities trade and finance, Zhou Yu, director of the Research Center of International Finance at the Shanghai Academy of Social Sciences, told the Global Times on Thursday.

China's 2015 GDP growth came in at 6.9 percent year-on-year, the slowest in 25 years, data from the National Bureau of Statistics showed on Tuesday.

No need to change system

"The markets have raised concerns over the current linked exchange rate system amid weaker sentiment, but I don't think it will break," Zhou noted.

Hong Kong still has a large amount of foreign exchange reserves that the government can use to influence the mechanism if necessary, Zhou pointed out.

As of the end of December 2015, Hong Kong held $358.8 billion in its foreign currency reserves - more than seven times the currency in circulation, according to a report China Merchants Securities Co sent to the Global Times on Thursday.

If the Hong Kong dollar weakens beyond the range of 7.85 under the current mechanism, the Hong Kong Monetary Authority could use those reserves to support the currency.

"Further downward pressure on the currency may occur, especially when economic developments in China point to a further slowdown," Diron said.