Hong Kong seen spending billions more to defend currency peg

Section:

By Tian Chen
Bloomberg News
Thursday, March 14, 2019

This round of currency intervention in Hong Kong is far from over.

That's according to analysts, who are watching the interplay between the amount of money in the city's financial system and local borrowing costs. Shorting the Hong Kong dollar will remain profitable until the latter starts to go up sharply, and the monetary authority will spend at least another HK$50 billion (US$6.4 billion) defending the peg before that happens, according to Bank of America Merrill Lynch and OCBC Wing Hang Bank Ltd.

... Dispatch continues below ...



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Hong Kong's currency has hit the weak end of its trading band repeatedly over the past week, spurring intervention that's cost nearly $700 million.

At the heart of the analysts' calculus is a call on how low the city's aggregate balance can go before banks start feeling a funding squeeze. ...

... For the remainder of the report:

https://www.bloomberg.com/news/articles/2019-03-15/hong-kong-seen-spendi...

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