HONG KONG, March 23 (Reuters) – The Hong Kong Financial Authority (HKMA) on Thursday lifted its base price charged via the in a single day low cost window by 25 foundation factors to five.25%, hours after the U.S. Federal Reserve delivered a price rise of the identical margin.
Hong Kong’s financial coverage strikes in lock-step with the U.S. as the town’s forex is pegged to the dollar in a decent vary of seven.75 to 7.85 per greenback.
“The Fed’s rate-hike choice is in line with market expectation, however there’ll proceed to be appreciable uncertainties on the rate of interest path within the US,” HKMA mentioned in an announcement.
HSBC Holdings 0005.HK mentioned it was leaving its greatest lending price in Hong Kong unchanged at 5.625%.
The Federal Reserve on Wednesday raised rates of interest by 1 / 4 of a share level however indicated it was on the verge of pausing additional will increase in borrowing prices after the collapse this month of two U.S. banks.
The Federal Open Market Committee coverage assertion additionally mentioned the U.S. banking system was “sound and resilient”.
The HKMA mentioned: “Particular person banks within the US had exhibited monetary well being and liquidity issues lately, which could end in credit score tightening.”
“It’s too quickly to evaluate how a lot this may additional have an effect on financial actions and affect financial coverage.”
The monetary and financial markets of Hong Kong continued to function in a clean and orderly method, regardless of the volatility of abroad markets, and Hong Kong greenback interbank charges would possibly stay at elevated ranges for a while, the HKMA added.
Hong Kong in a single day interbank provide eased additional to 1.94905% on Thursday, down 44.9 foundation factors from Wednesday. On Tuesday the benchmark had spiked to a four-month excessive of 4.14286%, pointing to a money squeeze brought on by uncertainty forward of the Fed’s coverage assembly final result and by seasonal demand for Hong Kong greenback funding.
The Hong Kong greenback weakened to 7.8490 per U.S. greenback on Thursday, extending a decline seen on Wednesday. It was down from a one-month excessive of seven.8355 reached on Tuesday.
Reporting by Donny Kwok and Georgina Lee; Enhancing by Himani Sarkar and Bradley Perrett
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