- Hong Kong Dollar Peg Protection
- U.S-China Tensions
- USD/HKD Outlook
USD/HKD exchange rate continues to flirt with five-year lows as the Hong Kong Monetary Authority moved to protect the dollar peg. Demand for the Hong Kong dollar remains high in the forex market as tensions between Beijing and Washington continue to edge higher.
The Honk Kong’s de-facto central bank has moved to curtail any pitfalls that might come into being amidst the politicized environment with a string of monetary policies. The Hong Kong Dollar has refused to budge to the pressures, trading at 7.75 against the greenback near the upper end of the U.S dollar Hong Kong dollar peg.
Time : 07-09-2020
Pivot : 7.7496
Technical View : Long Above 7.7496
Target : 7.7497 – 7.7499
Comments : Weak Bearish to Neutral
Last Price : 7.7497
Technical View : Short below 7.7492
Target : 7.7491 – 7.7490
In recent days the central bank has sold a combined HK$15.8 to purchase for U.S dollars. The Monetary Authority has already spent close to $12 billion in a bid to avert further strengthening of the Hong Kong Dollar against the greenback. The immediate $2 billion interventions come hot on the heels of reports President, Donald Trump Administration may be planning to undermine the Hong Kong U.S dollar peg.
Hong Dollar Peg Uncertainty
Trump aides are reportedly planning to undermine the peg in response to Beijing’s push to undermine U.S interest in the semi-autonomous region. The aides plan to limit banks’ ability to buy U.S dollars as part of an effort to hit back on China for its aggression on Hong Kong’s political freedoms.
However, some aides pushed back on the proposal, warning that such a move would only hurt the Hong Kong Banks and U.S banks, which have large interests in the city. The tension should continue to arouse speculation over the stability of the 37-year exchange rate.
Amidst the escalating tensions, the Hong Kong markets have remained resilient, shrugging off the tensions. Similarly, investors have continued to invest in the city going by the more than $1 billion invested in Hong Kong shares.