Window For This Bullish Hong Kong Dollar Trade Is Closing
- Interest rates seen falling further as aggregate balance rises
- Indicators show that carry trade is losing its appeal
Photographer: Justin Chin/Bloomberg
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Hedge funds may have just weeks left to make good money from the long Hong Kong dollar carry trade.
Local interest rates, which have remained stubbornly high relative to those in the U.S., will fall at a faster pace once a measure of the city’s liquidity pool exceeds HK$100 billion ($12.9 billion), according to Bank of America Corp. At HK$94.7 billion from Wednesday, that threshold is soon approaching. The result would be a narrowing of the Hong Kong dollar’s yield advantage over the greenback, which has persisted since November.