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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
HONG KONG
- USDHKD has been rising sharply since the start of the year, with the pair currently trading slightly below the high of its range band at 7.85 (chart below).
- The last time the pair tested the upper band was in 2018/2019 as HK protests in addition to the Sino-US trade spat spurred capital flight and increased pressure on HKMA to maintain the ‘peg’.
- This time, pressure has stemmed from the strong divergence in monetary policy between Hong Kong and the US.
- HK generally has to mirror Fed policy in order to ease the pressure on the USDHKD ‘peg’.
- In addition, economic data showed this morning that economic growth contracted significantly more than expected in Q1 by 4% YoY (vs. -1.3% exp.), down from +4.8% in Q4 2021, as ‘Zero-Covid’ policy has been strongly weighing on growth expectations (for both Hong Kong and mainland China).
- Strong support for the USD has also been constantly on the rise this year amid ‘hawkish’ Fed tone and surging geopolitical uncertainty.
- Will the HKMA be able to preserve the 'USDHKD' and keep a loose policy to stimulate the economy?
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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