The Scariest Hour in FX Is Keeping Hong Kong Peg Defenders Busy
- HKMA has been intervening in exchange rate around 5 to 6 a.m.
- Thin HKD liquidity then means large orders have outsize impact
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The early part of the Asian trading day -- when currency flash crashes tend to happen -- seems to be when intervention happens too.
All five instances the Hong Kong Monetary Authority has recently bought the local currency to keep it from falling below the weak end of its trading band have been around 5 a.m. to 6 a.m. local time.