Yu Weiwen discusses the recent dynamics of the Hong Kong dollar market: "Weak-side exchange rate guarantee" may be triggered again.

According to the Zhongtong Finance APP, on July 11th, Norman Chan, Chief Executive of the Hong Kong Monetary Authority, talked about the recent dynamics of the Hong Kong dollar market. He mentioned that the Hong Kong-US interest rate spread is still wide, making carry trade still profitable and keeping the Hong Kong dollar close to the 7.85 level. Depending on changes in the supply and demand of Hong Kong dollars, as well as other uncertain factors such as the Fed's monetary policy and US interest rate trends, the atmosphere of the stock investment market, global financial markets, and global capital flows, the "weak-side exchange rate guarantee" may be triggered again. Its extent and timing will inevitably be affected by the market environment, especially the supply and demand of funds. When the balance of supply and demand for the Hong Kong dollar falls to roughly equilibrium, the Hong Kong dollar interbank rate may rise, approaching the US interest rate more clearly, and the changes in the Hong Kong dollar interbank rate will be more sensitive to changes in market liquidity. Everyone should be prepared for the possibility of an increase in Hong Kong interest rates.