It’s Only Going to Get Wilder for Hong Kong Dollar Traders
- Local banks’ loan-to-deposit ratio rises to highest since 2002
- City’s currency to be “less predictable” on volatile Hibor: MS
Hong Kong currency
Photographer: emily2k/iStockphotoThis article is for subscribers only.
One assessment of the Hong Kong dollar’s dramatic turnaround in recent months is that it’s a sign of things to come.
The moves reveal structural tightness in the city’s liquidity conditions, according to Morgan Stanley. Hong Kong banks have far less idle cash on hand, after the amount of funds on loan soared to the highest since 2002 relative to deposits. Throw in a diminished pool of interbank liquidity and potentially high demand for the currency, and wild moves in local short-term rates are likely to occur more often.