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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.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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