Squeeze Moves From Hong Kong Dollar to Rates
- Liquidity expected to continue to tighten as Fed hikes rates
- Hong Kong is tied to U.S. policy thanks to a currency peg
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The Hong Kong dollar’s surge reverberated across the city’s money market on Monday, with interbank rates climbing by the most since the global financial crisis a decade ago.
Both moves are underpinned by the same phenomenon: liquidity finally drying up. That’s pushing Hong Kong borrowing costs up toward the U.S. rates they’re supposed to track.