Hong Kong Dollar Jumps Into Strong Half of Band, Hurting Shorts
- City’s interbank rates are now higher than those in the U.S.
- Liquidity remains tight as share sales, dividends lock up cash
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Hong Kong’s dollar punched into the strong half of its trading band for the first time since September, riding on momentum provided by elevated borrowing costs in the city.
The currency climbed as much as 0.19% to 7.7987 a dollar on Tuesday, crossing the 7.8 threshold. Local interbank rates remain near a decade high, outstripping the income a trader can expect on U.S. dollars. That’s undermining a carry trade -- sell Hong Kong dollars, buy greenbacks -- that had been profitable for years.