The Hong Kong dollar (HKD) has shown resilience in recent weeks, remaining strong amid ongoing uncertainty surrounding US interest rates. In October, the currency maintained its stability, supported by a slight easing in inflation and new government initiatives aimed at boosting Hong Kong's financial standing as an international hub for trade, shipping, and finance. Despite these efforts, analysts caution that the city’s economic recovery is sluggish, largely due to an incomplete recovery in the labor market and expected declines in home prices.
Recent measures announced by Chief Executive John Lee on October 16 are seen as a positive step, potentially providing a near-term boost to the economy. However, a broader recovery in home sales may be contingent on further reductions in interest rates. Economic sentiment remains cautious, particularly with the recent relaxation of tourism restrictions failing to fully alleviate doubts about the city’s economic trajectory.
In terms of exchange rates, recent data indicates that the HKD to USD has reached 90-day lows near 0.1274, trading just below its three-month average. This pair remained stable, fluctuating within a 1.3% range. Conversely, the HKD to EUR is at 0.1090, 2.5% beneath its three-month average, while the HKD to GBP is only slightly down by 0.8%. The HKD to JPY, on the other hand, has traded above its three-month average, reflecting a stronger performance in that pair.
While the local property market saw some government support measures come into effect—such as the scrapping of additional stamp duty for non-permanent residents—the ongoing economic challenges necessitate careful observation. Economists note that despite these support measures, the outlook for the HKD will heavily depend on improving domestic demand and the direction of the Federal Reserve’s monetary policy. The interplay between these factors will ultimately shape the currency's strength in the coming months.
