Increasing pressure on Hong Kong's linked Exchange system

Although the HKMA has repeatedly stated that it will stick to the pegged exchange rate system.　　But expectations of a stronger renminbi are now strong and investors are buying up Hong Kong dollar calls, and expectations that policymakers will be forced to abandon the peg have soared. At present, the implied exchange volatility in one-year period is 0.63%, while the peak of November 20 last year was 1.43% and the average for the past ten years was 1.3%.　　Last year, the Hong Kong Monetary Authority was forced to sell more than HK $480 billion to prevent its currency from appreciating. Feng Xiaozhong, general manager of Hang Seng Bank and head of finance and investment, said the upward pressure on the Hong Kong dollar was undoubtedly increasing as expectations of a stronger renminbi strengthened. Investors ' expectations of an appreciation of the Hong Kong dollar have already been reflected, with the dollar's 12-month forward contract trading at 5 o'clock in the afternoon yesterday at a 0.209% per cent lower than the 7.76 spot rate, while interbank interest rates in London interbank rates were 0.941% on a one-year dollar loan, while interest on Hong Kong dollar borrowings was 0.559%.　　At the same time, Hong Kong 12-month non-delivery forward renminbi foreign exchange shows that the renminbi still has 2.8% rising space. "But because Hong Kong has not yet achieved full circulation of the renminbi, it does not allow the renminbi to be used as a reserve currency and the renminbi deposits less, so technically the Hong Kong dollar cannot be pegged to the renminbi. Feng Xiaozhong said that the current renminbi deposits in Hong Kong climbed to about 66 billion per cent last year, still accounted for less than 1% of Hong Kong's banking system deposits, and the U.S. dollar accounted for about 40%. "The peg to the dollar is much more stressful, not pegged to the dollar." Feng Xiaozhong said, "Hong Kong is too small and a large amount of capital will cause great volatility to Hong Kong, which also determines that the Hong Kong dollar cannot have a free floating exchange rate mechanism." "In the long run, the renminbi appreciates, the expansion of the use of the renminbi in Hong Kong and the establishment of an offshore renminbi centre are all factors that have created a decoupling of the Hong Kong dollar from the greenback," once the renminbi appreciates in 6 months or 12 months, we will see changes in the Hong Kong dollar, "said Bernard, head of Asian currency trading　　The Hong Kong dollar will rise to a 7.75 per cent ceiling and investors will be more willing to opt for the Hong Kong dollar call option. Singapore tightened monetary policy yesterday by raising the midpoint of the Singapore dollar's volatility range, which led to a rise in the currencies of Asian countries with floating exchange rates, with all Asian currencies rising 0.1-1%, with the exception of the yen and the renminbi. In the coming days, the market will test the space for Singapore to allow the Singapore dollar to appreciate, and it is expected to try 1.37 Singapore dollar level, the trader said.