Currency intervention is becoming a daily necessity for Hong Kong as the local dollar continues to trade at the weak end of its trading band.
The Hong Kong Monetary Authority spent HK$5.99 billion (Dh2.8bn) buying local dollars as the weekend began, bringing its purchases over the past week to HK$19bn. Lower interest rates relative to the greenback have made shorting the currency a lucrative trade.
The intervention is a form of tightening in a city which imports US monetary policy thanks to its peg to the greenback. The HKMA’s aggregate balance of interbank liquidity will fall to HK$109.5bn on Wednesday, down from HK$179.8bn before the de facto central bank began defending the currency last month.
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"The carry trade of shorting the Hong Kong dollar will remain frequent, prompting the HKMA to keep intervening," said Tommy Ong, managing director for treasury and markets at DBS Hong Kong. "Interbank liquidity is still flush with aggregate balance nearing HK$100bn. The city’s interest rates may catch up with US borrowing costs only after the aggregate balance falls to HK$20bn to HK$50bn."
The city’s three-month interbank rate has jumped nearly 60 basis points to 1.75 per cent since the HKMA began intervening. That’s still 58 basis points below the US equivalent, suggesting pressure on the Hong Kong dollar will persist. The currency was little changed at HK$7.8496 per greenback as of 5:26pm local time, near the HK$7.85 weak end of the band.
"The aggregate balance will fall at a gradual and orderly pace with HKMA’s modest intervention,” said Ken Cheung, a currency strategist at Mizuho Bank in Hong Kong.
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Persuasion
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The Vile
Starring: Bdoor Mohammad, Jasem Alkharraz, Iman Tarik, Sarah Taibah
Director: Majid Al Ansari
Rating: 4/5
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Iran's dirty tricks to dodge sanctions
There’s increased scrutiny on the tricks being used to keep commodities flowing to and from blacklisted countries. Here’s a description of how some work.
1 Going Dark
A common method to transport Iranian oil with stealth is to turn off the Automatic Identification System, an electronic device that pinpoints a ship’s location. Known as going dark, a vessel flicks the switch before berthing and typically reappears days later, masking the location of its load or discharge port.
2. Ship-to-Ship Transfers
A first vessel will take its clandestine cargo away from the country in question before transferring it to a waiting ship, all of this happening out of sight. The vessels will then sail in different directions. For about a third of Iranian exports, more than one tanker typically handles a load before it’s delivered to its final destination, analysts say.
3. Fake Destinations
Signaling the wrong destination to load or unload is another technique. Ships that intend to take cargo from Iran may indicate their loading ports in sanction-free places like Iraq. Ships can keep changing their destinations and end up not berthing at any of them.
4. Rebranded Barrels
Iranian barrels can also be rebranded as oil from a nation free from sanctions such as Iraq. The countries share fields along their border and the crude has similar characteristics. Oil from these deposits can be trucked out to another port and documents forged to hide Iran as the origin.
* Bloomberg
Prop idols
Girls full-contact rugby may be in its infancy in the Middle East, but there are already a number of role models for players to look up to.
Sophie Shams (Dubai Exiles mini, England sevens international)
An Emirati student who is blazing a trail in rugby. She first learnt the game at Dubai Exiles and captained her JESS Primary school team. After going to study geophysics at university in the UK, she scored a sensational try in a cup final at Twickenham. She has played for England sevens, and is now contracted to top Premiership club Saracens.
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Seren Gough-Walters (Sharjah Wanderers mini, Wales rugby league international)
Few players anywhere will have taken a more circuitous route to playing rugby on Sky Sports. Gough-Walters was born in Al Wasl Hospital in Dubai, raised in Sharjah, did not take up rugby seriously till she was 15, has a master’s in global governance and ethics, and once worked as an immigration officer at the British Embassy in Abu Dhabi. In the summer of 2021 she played for Wales against England in rugby league, in a match that was broadcast live on TV.
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Erin King (Dubai Hurricanes mini, Ireland sevens international)
Aged five, Australia-born King went to Dubai Hurricanes training at The Sevens with her brothers. She immediately struck up a deep affection for rugby. She returned to the city at the end of last year to play at the Dubai Rugby Sevens in the colours of Ireland in the Women’s World Series tournament on Pitch 1.
