Hong Kong Interbank Liquidity Set to Hit Lowest Since 2008
- Aggregate balance set to fall to HK$49.2 billion on Thursday
- Hibors will eventually catch up with US rates, says BI’s Chiu
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Hong Kong’s interbank liquidity is falling toward its lowest level since the global financial crisis, following a series of intervention by the city’s de facto central bank to defend the local currency’s peg to the dollar.
The city’s aggregate balance is set to drop to HK$49.2 billion ($6.3 billion) on Thursday when the Hong Kong Monetary Authority settles its earlier purchase of HK$6.9 billion to keep the currency peg intact. The key gauge of interbank liquidity already has shrunk about 90% from its peak in 2021, though the impact on borrowing costs have been muted so far.