Hong Kong Borrowing Rates’ Catchup With US Stymies Carry Trade
- 1-month Hibor is on par with SOFR, an alternative of Libor
- Hong Kong rates likely to come off after end-June: Mizuho
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A gauge of Hong Kong’s key borrowing rates has caught up with its new US equivalents, diminishing at least temporarily the appeal of a popular carry trade that borrows the local currency to buy the greenback.
The one-month Hong Kong interbank offered rate, or Hibor, has largely pulled even with the one-month implied US dollar Secured Overnight Financing Rate, a reference rate that’s an alternative to US dollar Libor. Hibor had been below the US rate since around year-end, but surged recently amid demand for the Hong Kong dollar for dividend payments as is typical at this time of year.