Hong Kong Braces for Higher Rates as Currency Losses Quicken
- Gap between local and U.S. rates is widest since 2009
- City’s dollar has weakened to midpoint of trading band
Hong Kong one-hundred dollar banknotes are arranged for a photograph in Hong Kong, China, on Wednesday, Jan. 20, 2016. Hong Kong dollar forwards sank to their weakest level this century, interbank loan rates jumped the most in seven years and the Hang Seng Index tumbled as China's market turmoil fueled speculation the city's 32-year-old currency peg will end.
Photographer: Justin Chin/BloombergThis article is for subscribers only.
How long can it last?
That’s what watchers of Hong Kong’s markets are asking as the gap between local and U.S. interbank rates widens to the most since 2009. The city’s currency peg to the greenback effectively ties its monetary policy to that of the U.S., making the growing differential all the more curious.