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Shuli Ren: Hong Kong has all but abandoned the dollar peg
By Shuli Ren
Bloomberg News
Wednesday, June 4, 2025
Interest rates in Hong Kong have been eerily low, raising the question of whether the city’s dollar peg is now in name only.
Hong Kong surrendered its monetary autonomy decades ago, thanks to a unique mechanism that restricts its currency fluctuation to a narrow band of 7.75 and 7.85 per dollar. That means the city's borrowing costs move in lockstep with those in the United States, which are dictated by the Federal Reserve's rate policies.
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Lately, though, currency traders have been staring at an anomaly.
The one-month Hong Kong interbank offered rate, or Hibor, has collapsed since early May. The gap with the U.S. secured overnight financing rate, or SOFR, is at an unprecedented level of more than 3 percentage points. Investors are now asking what caused this divergence and whether Hibor will stay lower for longer. ...
... For the remainder of the commentary:
https://www.bloomberg.com/opinion/articles/2025-06-04/hong-kong-has-all-but-abandoned-the-dollar-peg
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