0544 GMT - The Hong Kong dollar may weaken further to 7.85 against the U.S. dollar on more carry trades, Mizuho Securities Asia's Ken Cheung says in an email. Abundant HKD liquidity conditions have played a prominent role in driving HKD rates to extreme lows, resulting in substantial deviation from USD rates and creating an opportunity for "long USD carry trades," says the director of forex strategy. This boosted spot USD/HKD from 7.75 to near 7.83 in only three weeks, Cheung notes. Looking ahead, the "more likely scenario is further carry-trade induced HKD weakening to 7.85 level, potentially triggering the opposite leg of HKMA intervention to drain liquidity to defend the peg," Cheung says. USD/HKD is little changed at 7.8288. (ronnie.harui@wsj.com)
(END) Dow Jones Newswires
May 21, 2025 01:44 ET (05:44 GMT)
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