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Hong Kong banks take USD482m in short-term cash amid tightened liquidity

Hong Kong banks have borrowed the largest amount of short-term cash since January 2021 from the Hong Kong Monetary Authority (HKMA), suggesting a surge in liquidity demand. According to Bloomberg data, the de-facto central bank loaned out HKD3.77bn (USD482m) via its discount window last Monday. Liquidity tightening due to the HKMA managing the city’s dollar peg has pushed interbank offered rates closer to US borrowing costs. “Higher rates and recent developments have made it harder for banks to raise funds via interbank channels," said Stephen Chiu of Bloomberg Intelligence. Despite the sudden borrowing increase, some analysts suggest this is not part of a systematic trend and may be a one-off event linked to thin market conditions during the US holiday.


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