Hong Kong Dollar Carry Trade Loses Appeal as 1-Month Hibor Hits Highest Since January
Updated
Updated · Bloomberg · Jun 10
Hong Kong Dollar Carry Trade Loses Appeal as 1-Month Hibor Hits Highest Since January
2 articles · Updated · Bloomberg · Jun 10
Summary
One-month Hibor climbed to its highest level since January this week, eroding the economics of funding carry trades with the Hong Kong dollar.
Mid-year dividend payouts by listed companies and banks' efforts to meet regulatory metrics have driven a seasonal jump in cash demand, lifting local funding costs.
That rise makes borrowing in Hong Kong dollars less attractive for investors seeking to profit from lower funding rates.
The shift points to tighter near-term liquidity conditions in Hong Kong, at least through the seasonal mid-year funding squeeze.