Medium of exchange

The boring Hong Kong dollar has been more exciting of late. A couple months after a U.S. hedge fund manager targeted the currency, it is moving sharply. Two giant upcoming stock sales are a major factor, but the recurring phenomenon flags a peculiarity of the system.

Since late May, Hong Kong’s dollar has been on a relative tear for a currency that trades in a narrow band against the U.S. dollar, to which it is pegged. It touched its strongest level in two years last week. The three-month Hong Kong Interbank Offered Rate ticked up to 2.7%, outstripping the equivalent U.S. dollar Libor rate of 2.3%.

Source: https://www.breakingviews.com/considered-view/budweiser-and-alibaba-flag-hong-kong-dollar-oddity/

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