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Bloomberg
The resurgent Hong Kong dollar has pushed closer to the strong half of its trading band, amid a spike in local funding costs that has upended crowded bets on shorting the currency.
The Hong Kong dollar saw its biggest intraday rise in three years on Monday to as high as 7.8004 per dollar, bringing its gain for November to 0.6%. That puts it on track for the best month in two decades and is the closest the currency has been to the mid-point of its 7.75 to 7.85 trading band since February.
The rally came as the Hong Kong Monetary Authority’s intervention in the foreign-exchange market, which effectively lifted interbank funding costs, rendered a popular strategy of shorting the local dollar unprofitable. The city’s three-month funding costs rose to levels higher than the US equivalent for the first time since February last month.
The Hong Kong dollar had been trading near the weak end of its band for almost half of this year, as investors borrowed the currency cheaply and sold it against the higher-yielding greenback.