Hong Kong dollar rallies to two-year high
The Hong Kong dollar rose to the strongest since May 2017 on Thursday, rising as much as 0.19% to 7.7827 per United States dollar.
The Hong Kong dollar rose to the strongest since May 2017 on Thursday, rising as much as 0.19% to 7.7827 per United States (US) dollar, as the one-month interbank rate climbed to the highest in more than a decade amid a tighter liquidity environment.
The currency’s movement comes with liquidity tightness, and experts have said that the situation could be due to cash stocked up for dividend payments as well as large initial public offerings (IPOs). Ongoing demonstrations in the country may also have impacted the liquidity in the currency.
Brewer Anheuser-Busch InBev NV is raising up to US$9.8 billion through the listing of its Asia-Pacific business in Hong Kong this month, while Alibaba Group is said to have filed for an IPO in Hong Kong, with the plan to raise US$20 billion.
In contrast, interest rates in the US are falling as the US Federal Reserve prepares to ease monetary policy.
The Hong Kong dollar is likely to hover at elevated levels in July even after seasonal pressures ease as market players may continue to be cautious in the low aggregate balance environment and continue to hoard cash.
In March, the country’s monetary authorities had spent HK$22.1 billion to defend the currency’s peg to the US dollar.
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