Longest Hong Kong Dollar Rally in Eight Years Is Burning Shorts
- Currency has risen for seven days on elevated borrowing costs
- Volatility has come as the pool of interbank liquidity shrinks
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Hong Kong dollar bears are abandoning bets the currency will weaken, squeezed by the longest streak of gains in more than eight years.
The local dollar rose 0.07% to 7.7868 versus the greenback on Tuesday, taking its seven-day gain to about 0.5% -- a large move for a pegged exchange rate. Supporting the advance are bets that borrowing costs will remain elevated versus falling U.S. dollar rates, as banks hoard cash for year-end regulatory checks. An easing of trade tensions between China and the U.S. has also helped, as foreign funds snap up stocks in Hong Kong.