For the first time since August, the Hong Kong Monetary Authority (HKMA) intervened on Thursday to sell HK$3.1 billion ($400 million) in Hong Kong dollars as the local currency hit the strong end of its official trading range.

The intervention came as Hong Kong stocks surged to a seven-year high, powered by mainland Chinese buyers after Beijing last week encouraged institutions, including mutual funds and insurers, to purchase Hong Kong shares. [.HK]

Speaking at a media briefing on Friday, Hong Kong Exchanges and Clearing Ltd (HKEx) Chief Executive Charles Li said the exchange could boost the current quotas under the Hong Kong-Shanghai stock connect program by more than 30 percent.

The quotas limit how much mainland investors can buy Hong Kong stocks, and how much Hong Kong-based investors can buy stocks in China.

Li did not say when the quotas would be raised.

Chinese investors snapped up all of the 10.5 billion yuan ($1.7 billion) daily quota <.SQUOTA.HS> for buying Hong Kong stocks on both Wednesday and Thursday. It was the first time this has happened since the program was launched in October last year.

The Hong Kong dollar is pegged at 7.8 to the U.S. dollar, but can trade between 7.75 and 7.85. Under the currency peg, the HKMA is obliged to intervene when the Hong Kong dollar hits 7.75 or 7.85 to keep the band intact.

John Zhu, greater China economist for HSBC, said it was still too early to say whether HKMA would need additional tools to cope with pressure on the peg arising from the increase in capital inflows.

"As with everything, when the facts change then you should probably start to have a rethink but I don’t think things have changed that drastically, certainly not from the macro level," Zhu said.

(Reporting By Michelle Chen and James Pomfret; Writing by Kazunori Takada and Lawrence White; Editing by Simon Cameron-Moore)