HKD - BER News
Hong Kong Dollar – Market News
For the second time in recent months, Hong Kong’s Finance Secretary, Paul Chan, has issued a warning on the country’s housing market.
“One has to be very careful if one really wants to buy a property in Hong Kong,” said Secretary Chan on Tuesday morning.
“I would not be surprised if there will be a certain adjustment in the market,” he added.
To the surprise of many, the Bank of Canada raised interest rates on Wednesday to 1.0%, from 0.75%, which sent currencies in the Asia-Pacific region tumbling against the Canadian dollar.
The Bank of Canada had been expected to raise the cost of borrowing again this year, following a quarter-point hike in July, but most analysts had been predicting a move in October.
On Wednesday, a single explosive hour formed the basis of what became the Hong Kong dollar’s best day since February 2016.
A little after 6am in London and 1pm in Hong Kong, the Hong Kong dollar suddenly took off, forcing USD/HKD down from levels around 7.826 to 7.8116. And while a 0.18% move might seem negligible when compared to those common in other markets, such moves are rare in USD/HKD due to the manner in which Hong Kong’s currency is pegged to its American counterpart.
For much of 2017 it’s been one-way traffic in the market for Hong Kong dollars.
USD/HKD rose (the Hong Kong dollar fell) in fourteen of the seventeen weeks prior to July 7th, blowing through the midpoint of its allowed 7.75-7.85 range with ease.
The currency had, however, stabilized over much of the past month – a period in which USD/HKD meandered sideways between 7.8015 and 7.814.
Ahead of today’s US non-farm payrolls data, the Hong Kong dollar’s fall continues unabated. This week the currency is holding above 7.81 against the US dollar and reached an eighteen-month low (a USD/HKD high) on Monday of 7.8140.
Hong Kong dollar weakness continues to be driven by the ever-widening gap between local and US interbank interest rates.
“We have to warn our people about the dangerous situation of the property market,” said Hong Kong’s Financial Secretary, Paul Chan, today.
In an interview with Bloomberg’s Haslinda Amin, Chan expressed concern about a potential housing market correction in Hong Kong, which is currently the world’s most expensive city for property.
Very early this morning in Asia, Bank of Canada (BOC) Council member Carolyn Wilkins lit a fire under the Canadian dollar with her remarks to an audience at the Asper School of Business in Winnipeg, in which she hinted at a possible rate hike by the BOC. Wilkins said that “as growth continues…the Governing Council will be assessing whether the considerable monetary policy stimulus presently in place is still required.”
Since the 2008/09 financial crisis, the Bank of Canada, like the central banks of most other advanced economies, has been forced to adopt an especially easy, or loose, monetary policy.
The Korean won finally made its move yesterday away from the 1130-to-1140 range against the US dollar. The exchange rate for USD/KRW had been trapped between the two prices for much of the previous ten trading days. At the end of yesterday’s New York session – the traditional end of the FX trading day – USD/KRW stood at 1124.30.