MNI Brief: Hong Kong Dollar Speculators Will Fail - HKMA CEO

Hedge fund speculators do not understand how Hong Kong’s currency board system works and will lose money trying to break the peg, Hong Kong Monetary Authority chief executive Eddie Yue told a Legislative Council panel on Wednesday.

His comments follow prominent U.S. hedge fund managers disclosing large notional short positions against the Hong Kong dollar in recent weeks. The Hong Kong dollar is pegged in a tight range to the U.S. dollar.

Yue said the HKMA had the resources to maintain the peg. “Our FX reserve is over USD400 billion and our banking system is stable” Yue said. He said hedge fund managers grabbed media headlines but did not convince the majority of market analysts who “also shared my view”.

“We monitor these hedge fund positions closely, and we have the tools at hand to stop them making a concerted effort to attack the peg” he said.

Hong Kong's Exchange Fund, which is managed by the HKMA, made a HKD100.1 billion loss in the third quarter. The investment loss was HKD265.5 billion over the first three quarters.