B[Hong Kong Monetary Authority President Yu Weiman: The softness of the Hong Kong dollar exchange rate mainly reflects the influence of two major factors] On October 6, the official website of the Hong Kong Monetary Authority published an article "Recent Trends in the Hong Kong Dollar" by the President of the Hong Kong Monetary Authority Yu Weiman. The article pointed out that last month, the Federal Reserve raised interest rates for the first time in three years, the interest rate gap between Hong Kong and the United States widened, and the exchange rate of the Hong Kong dollar weakened. This mainly reflects the influence of two major factors, the carry trade induced by the widening interest rate difference between the Hong Kong dollar and the US dollar, and the fall in demand for Hong Kong dollars related to the stock market.
The Hong Kong exchange rate generally fluctuated between 7.8300 and 7.8380 from April to May. It has gradually weakened since mid-June and has recently hovered around 7.8460-7.8475, getting closer to the "weak-side convertibility guarantee" of 7.8500.
Yu Weiman said that as far as the current situation is concerned, if Hong Kong and the United States maintain a significant interest rate difference, the automatic interest rate adjustment mechanism of the linked exchange rate system will cause the Hong Kong dollar to weaken, and even trigger the "weak-side convertibility guarantee", which will cause the aggregate balance of the banking system to decline, the Hong Kong dollar interbank interest rate to gradually increase, and the Hong Kong dollar exchange rate to stabilize between 7.75-7.85 per US dollar exchange guarantee level. This is the design of the linked exchange rate system and its effective normal operation. However, whether and when the "weak-side exchange guarantee" will be triggered is affected by the above-mentioned factors and is difficult to predict accurately.
In addition, Yu Weiman also said that in the current uncertain global economic and financial environment and frequent changes in capital flows, the Hong Kong Monetary Authority will closely monitor the financial market conditions and maintain Hong Kong's currency stability through the linked exchange rate system. As for deposit and loan interest rates, banks generally consider factors such as the supply and demand for funds in the interbank market, interbank interest rates and current relevant interest rate levels, as well as their own capital cost structure, to assess whether and how much adjustment is needed. B[Hong Kong Stock Exchange: More RMB-denominated precious metals and other commodity investment products will be launched in succession] On September 23, Yu Xueqin, Managing Director and Head of Markets of the Hong Kong Stock Exchange, said that the Hong Kong Monetary Authority and the Securities and Futures Commission jointly formulated a roadmap for the development of fixed income and money markets last year, and many of the details were implemented by the Hong Kong Stock Exchange. He mentioned that the 5-year treasury bond futures were launched in August this year. The number of open contracts increased from about 900 contracts in the first week of launch to nearly 3,000 contracts currently, attracting market participants from the Middle East, Europe, America, Southeast Asia and other places, reflecting that it is a direction worthy of development. He revealed at the Financial Market Summit that gold futures contracts denominated in RMB and settled in Hong Kong are expected to be launched early next year, and more investment products in precious metals and other commodities denominated in RMB will be launched to enrich the selection of RMB-denominated assets. (RTHK website)
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