Hong Kong’s intervention to support the local dollar has made just a minor dent in traders’ bearish bets, suggesting more liquidity will need to be dr
Hong Kong’s intervention to support the local dollar has made just a minor dent in traders’ bearish bets, suggesting more liquidity will need to be drained from the system to defend the currency peg.
The Hong Kong dollar has strengthened less than 0.1% from the weak end of its trading band with the greenback since the city’s de-facto central bank stepped in this week. Traders are looking through the intervention to the recent slump in the city’s interbank rates, which continue to offer hedge funds the biggest opportunity in history to borrow the currency cheaply and buy the higher-yielding US dollar in the so-called short HKD carry trade.
www.bloomberg.com