Hong Kong braces for higher rates as currency losses accelerate
City's currency pegged to greenback, and the current wide HK dollar-US dollar gap is seen as not normal
Hong Kong
HOW long can it last? That's what watchers of Hong Kong's markets are asking as the gap between local and US interbank rates widens to the most since 2009. The city's currency peg to the greenback effectively ties its monetary policy to that of the US, making the growing differential all the more curious.
Now things may be changing, with forward points and interest rate swaps in Hong Kong's dollar starting to bottom out. The reasoning is simple: with the currency having fallen to the middle of its permitted band and the US expected to continue raising rates, it's a matter of time before the city's exchange rate reaches its weak limit, forcing the local monetary authority to suck in liquidity.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Companies & Markets
Google, US clash over search advertising as trial winds down
Apple rallies most in 18 months on upbeat forecast, buyback
US: Wall St opens sharply higher on soft jobs data
HSBC has no plans to dispose of further businesses, chairman says
Glencore Group nears deal for Shell’s Singapore oil refinery
Chinese share of French EV market slumps after incentives curbed