This morning it was announced that the Hong Kong Monetary Authority, Hong Kong’s cental bank, had injected RMB liquidity into Hong Kong’s banking system to stem the increase in RMB deposit rates. This may seem pretty innocuous news as it only amounted to about $1.6 billion USD, a pretty paltry amount in today money markets. However, this is very important news given the context.
...Now here is where it really gets interesting.
1. The HKMA injecting RMB liquidity into the Hong Kong banking market is having the perverse impact of helping traders short the RMB in the offshore market putting more pressure on the PBOC to intervene.
Now here is where it gets really, REALLY interesting.
1. There is a high degree of probability the HKMA got its RMB liquidity from the PBOC itself via a standing swap agreement.
Easter Eggs (1 of 21): Hot Air
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FEEDPreface to all 21 parts: This is a special holiday weekend, because not
only does it contain Good Friday and Easter, but it also begins the Slope
of Ho...
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