Hong Kong's Banks, Awash in Money, May Ignore Fed's Cue on Rates
- Interbank funds reached record HK$426 billion last month
- Federal policymakers to decide on rate increase this week
A Fed Rate Hike Isn't Good News for Everyone
Hong Kong’s lenders are awash with near-record levels of interbank funds, giving them scope to resist the immediate need to pass on any interest-rate increase by the city’s de facto central bank and the U.S. Federal Reserve this week.
China’s yuan devaluation in August helped drive the aggregate balance of funds in Hong Kong’s banking system to HK$426 billion ($55 billion) on Nov. 4, the highest level since at least 1997. While that measure had fallen to HK$391 billion as of Tuesday, Australia & New Zealand Banking Group Ltd. estimates that’s more than enough for banks including HSBC Holdings Plc to conduct day-to-day lending operations until early next year before they have to react to higher interbank funding costs.