Hong Kong Dollar Shunned as Traders Chase Higher Yuan Yields

Hong Kong banks are deploying most of their yuan funds as loans, Ronald Man, a North Asia rates and foreign-exchange strategist at BofAML, wrote in a note. If they continue to sell the local currency, money market rates will remain elevated, forward points will turn more negative and the spot exchange rate will come under further pressure, he said. Man expects the Hong Kong dollar to end this year at HK$7.83 compared with HK$7.82 now.

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