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Hong Kong Liquidity Shrinks 50% Since May Amid Currency Defense
A measure of Hong Kong’s interbank liquidity halved in the past two months, with analysts forecasting more cash drainage as the city’s de-facto central bank defends its currency. The Hong Kong Monetary Authority has bought a total HK$172 billion ($22 billion) of local currency since May 11, shrinking the aggregate balance to about HK$165 billion. That has pushed up local interest rates, helping narrow the gap with the US to help the HKMA maintain its dollar peg. The intervention though is draining the city’s liquidity, with Hayman Capital Management’s Kyle Bass claiming it may be depleted by the end of next ... (full story)