Hong Kong's Foreign Exchange Intervention Highest Since 2009 Crisis
Hong Kong's central bank has sold more of its local currency so far this year than it did in any full year since the global financial crisis, in a bid to stop the unit strengthening and breaking its peg with the greenback. Capital has flown into the Asian financial hub in 2020, initially due to comparatively high interest rates, and subsequently attracted by a series of large initial public offerings, analysts said.
Ant Group's looming $35 billion joint listing in Hong Kong and Shanghai, for example, is expected to keep demand high.
The Hong Kong Monetary Authority (HKMA) sold HK$10.9 billion ($1.41 billion) on Tuesday in interventions in Hong Kong and U.S. trading hours.
That brings its total so far this year to HK$230.6 billion, beating the HK$227 billion for the full year of 2015, which was previously the highest since 2009, according to official data and Reuters calculations.
This is a sharp turnaround from 2019, when some feared political uncertainty would drive money out of Hong Kong.
The Hong Kong dollar is pegged in a narrow range of 7.75-7.85 to the U.S. dollar. When it weakens to HK$7.85 a dollar, the HKMA buys Hong Kong dollars from the market. When it strengthens to $7.75, the HKMA sells Hong Kong dollars.
Carie Li, economist at OCBC Wing Hang Bank in Hong Kong, said the factors driving the inflows had varied throughout the 2020.
"Back in April it was about the 'carry trade' as the Fed cut rates to nearly zero, but Hong Kong interest rates did not follow the trend immediately," she said.
This meant traders sold U.S. dollars for Hong Kong dollars to benefit from the better rates.
"At the end of June, there were strong equity inflows ... and then a very strong IPO pipeline which resulted in very strong HK dollar demand," Li said.
This seems set to continue.
"The Hong Kong dollar remains 'biddish' at its strong-side convertibility undertaking of 7.75 on the buoyant IPO flow," Ken Cheung, chief Asian FX strategist at Mizuho Bank wrote in a research note.
"Currently there are six IPO subscriptions underway, with the Chinese giant internet payment IPO (Ant Group) scheduled later this month."
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
