HK Dollar on Edge of Crisis

Alhambra: Nearly Time For Some Speculator Blame
The Hong Kong dollar is a hair’s breadth away from a currency crisis. Plummeting over the last week or so, the exchange value crossed 7.84 today. At 7.85, the HKMA is required to sell US dollars in order to buy up HKD. That may be just what Asian banks are looking for, some other US not HK dollar supply.

...Hong Kong officials can act as they please, of course, just as US and European policymakers have time and again been similarly caught looking in the wrong direction. The difference for the HKMA is 7.84 (FX rather than collateral irregularity). There is no margin for error left in a currency that is supposed to be stable and predictable. Required support from the monetary board isn’t that at all. What’s left will be the expected blame poured upon those evil currency “speculators.” That’s almost certainly next.
Recall the end of 2017: The Chinese Appear To Be Rushed
Since the middle of last week, CNY has been sharply higher. All those “dollar” balances that were surely sitting in Hong Kong perhaps just waiting for year-end were moved almost all at once.

...While there is no official reason for the hurry in obtaining what was being stored in Hong Kong, unofficially there is always hinted official pressure for getting each and every calendar year off on the right foot. It’s not just China’s looming New Year Golden Week, January is always prioritized (technocratic Communism) in how things work for the Chinese.

They tend to front load almost everything, and given what CNY has done each of the past two Decembers there was no interest in even the slightest hint at repeating them. It’s the usual signature of China’s official sector including the PBOC – overdo it just to make sure.
A currency crisis in Hong Kong wouldn't bode well for China.

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