HKMA Vows Orderly Hong Kong Dollar Market as Liquidity Thins

The Hong Kong Monetary Authority said it is "closely monitoring market developments and the external environment" to ensure the orderly functioning of Hong Kong-dollar markets. The statement, released early Thursday, follows a period of capital outflows that has reduced the banking system’s aggregate balance, a key gauge of interbank liquidity. The HKMA warned that as the aggregate balance continues to decline, Hong Kong-dollar interbank rates are likely to rise. The authority added that, depending on capital-flow trends and supply-demand dynamics, the weak-side convertibility undertaking—its automatic support mechanism for the currency peg—may need to be triggered again.