April 14, 2018

FXPRIMUS, Market Alert: Is the Hong Kong's dollar peg against the US dollar at risk?

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Here are the movements which experts expect from Hong Kong Dollar.

This article is originally referred from FXPrimus Special Report - Stavros Tousios.

“Over the past few days we have noticed that the Hong Kong Dollar has fallen to the weaker end of its permitted band, trading at 7.85 on three separate occasions!

Pressure on the HK Dollar is tremendous as we speak as the foreign currency is pegged to the US Dollar at 7.8, with the top of its permitted band being the 7.85, the bottom being 7.75, a level reached in 2015, where the monetary authority last intervened.

The weak-side of the trading band introduced back in 2005, defined as the weak-side convertibility undertaking (CU), had Hong Kong Monetary Authority buying 2.42 billion Hong Kong Dollar from the exchange market yesterday during the US session, and again, another 816 million as the interest rate gap between Dollar and the Hong Kong counterpart widened.

With market participants looking at the situation with interest it is likely that activity will remain at increased levels as the interbank rates in Hong Kong soared 4.1 basis points for the day, the largest increase since November 29.

According to analysts’ price could stay around the 7.85 per US Dollar for the rest of 2018 but since the Hong Kong Monetary Authority is obligated to defend the level and stands ready to fulfill any requests from banks to support the currency something big may be coming ahead that has a lot of commonalities with the 2015 Swiss Franc.”

Any opinions, news, research, analyses, prices or other information contained here are provided as general market commentary and do not constitute investment advice. FXPRIMUS does not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

Original Source: FXPrimus Special Report - Stavros Tousios

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