Bill,
looks like renewed attack on the HK peg? I wonder why all the gurus are all saying Asia has hit bottom and is enroute to recovery. The latest being that guy Holland on CNBC this morning. I think he is clueless as to where Asia is on the map.
By the way, was that you laughing in the back when your GOOD FRIEND Joe Battalgia (sp?) was also on CNBC this morning? In case you did see it, this is what he said "....." well, you know what he said, you heard it many times before.
Ramsey
scmp.com
Monday March 22 1999
Money Market
After-trade arbitrage
cash flood from SAR kills
rate-cut hopes
PETER CHAN
Intensifying interest-rate arbitrage activities in New
York trading after Hong Kong's close on Friday saw the
sale of HK$1.31 billion to the Hong Kong Monetary
Authority, causing an outflow of US$170 million from
the SAR's banking system.
The outflow is expected to keep short-term
money-market rates firm, if not push them higher,
reducing the chances of an interest-rate reduction this
week.
The aggregate balance of the banking system, the first
line of defence against attacks on the Hong Kong dollar,
is forecast to shrink to HK$2.9 billion from the previous
HK$4.22 billion when sales are settled tomorrow.
The sales were invited by the emergence of arbitrage
opportunities from the decline of short-term Hong Kong
interest rates to levels below that of the US since last
Tuesday.
Traders said the intensity of the selling pressure was
not yet known, because the volume of trading in the spot
local currency during New York hours was always thin
enough for small-size orders to trigger large movements.
Hong Kong Association of Banks chairman Liu Jinbao
last week backed the association's decision not to
respond to the increasing selling pressure by lowering
savings deposit rates.
"Selling pressure during the week saw the spot Hong
Kong dollar rate stay at the alert level of 7.75 against
the US dollar," he said on Friday.
Mr Liu also said the reluctance of longer-term rates to
fall in tandem with the short-term rates had created
anxiety among the association members.
The one-month rate finished last week's trading at
4.9375 per cent but the two-year rate was still firm at
7.18 per cent. |
