Economics
Hong Kong Tightens Liquidity With $192 Million Peg Defense
- HKMA intervenes to defend currency for first time since August
- Interest-rate spread makes shorting Hong Kong dollar lucrative
Photographer: Justin Chin/Bloomberg
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Hong Kong faces the likelihood of rising borrowing costs after the city’s de facto central bank intervened to defend its currency peg for the first time since August.
The Hong Kong Monetary Authority bought HK$1.51 billion ($192 million) of local dollars during London and New York trading hours after the currency fell to the weak end of its trading band, it said in a statement Saturday. The move will reduce the aggregate balance, a measure of interbank liquidity, to a decade low of HK$74.8 billion.