USD/HKD: Increasing demand for Hong Kong dollar to offset the impact of Fed tapering – ANZ

For the first time since December 2019 USD/HKD spot is approaching 7.80, the midpoint of the band. Is The Hong Kong Monetary Authority (HKMA) ready for quicker tapering? Economists at ANZ Bank explain their view.

Equities market activities will likely become vibrant in 2022

“The Hong Kong Monetary Authority (HKMA) would increase the issuing of its Exchange Fund Bills again as the Fed mulls a larger scale of tapering.”

“As the Aggregate Balance continues to drop, the liquidity in the banking system will be tightened. Any further withdrawal of liquidity by the HKMA will change future liquidity conditions.”

“Equities market activities will likely become vibrant in 2022. As a result, increasing demand for HKD could offset the impact of Fed tapering next year.”