atans1

Attempt to bring down HK’s financial system fails: yet again

In Hong Kong on 04/09/2019 at 10:44 am

A wannabe leader (Intern in ang moh hedgie that is short HK and China?) in the protest movement tried to cause chaos in HK’s financial system, the FT reported.

A few weeks ago, a protester called for massed cash withdrawals and currency conversions into US$: to try to cause problems for local banks. The HK$ has been pegged to the US$ since the early 1980s, and the Hong Kong Monetary Authority allows it to move within a narrow trading band against the US$.

“Converting to a foreign currency (like the US dollar) also protects yourself, so if the currency peg goes pear-shaped you won’t be left holding Hong Kong dollars,” the person wrote. Despite photos appearing on social media showing large stacks of banknotes withdrawn by people, the HK$ finished trading only a little weaker.

Nothing further was heard.

What the guy was trying to get Hongkies to do do, was what hedgies tried to do to HK in the 1998 but failed.

Even George Soros lost money.  After successful short attacks on the currencies of Thailand and Malaysia, he launched a dual assault on Hong Kong’s currency and stock market. The HKMA was forced to spend about HK$120bn (U$15.1bn) fending off Mr Soros and other short sellers. HKMA made a lot of money, not only on the currency but on HK shares. Btw it monetised its share holding by creating an ETF: https://www.hkma.gov.hk/eng/key-information/insight/20091112.shtml

Ang moh hedgies got taken to the cleaners.

How the peg works

Since 1983, the linked exchange rate system is a unique type of exchange rate regime used for the Hong Kong dollar to be pegged with the United States dollar at a fixed rate of HK$7.80 = US$1. In this unique linked exchange rate system, the Hong Kong Monetary Authority (HKMA) authorises the three note-issuing banks (HSBC, Bank of China and Standard Chartered) to issue new banknotes provided that they deposit an equivalent value of United States dollars with the HKMA.

In practice, in the unique linked exchange rate system, the exchange rate of HK$7.80 = US$1, is strictly controlled by the Hong Kong Monetary Authority in the foreign exchange market by controlling supply and demand of Hong Kong dollars in order to influence the exchange rate being fixed. By this arrangement the HKMA guarantees to exchange United States dollar into Hong Kong dollars and vice versa, at the rate of 7.80. When the market rate is below 7.80, the banks will convert United States dollar for Hong Kong dollars from the HKMA, Hong Kong dollars supply will increase, and the market rate will climb back to 7.80. The same mechanism also works when the market rate is above 7.80, and the banks will convert Hong Kong dollars for United States dollars.

By this arrangement, the Hong Kong dollar is backed by one of the world’s largest foreign exchange reserves, which is over 7 times the amount of money supplied in circulation or about 48% of Hong Kong dollar M3 at the end of April 2016.[14]

https://en.wikipedia.org/wiki/Hong_Kong_dollar

Here’s pice on why attempts to destroy peg fail: https://investors-corner.bnpparibas-am.com/investment-themes/emerging-markets/hong-kong-dollar-peg/

Fyi, it was an ang moh who devised the peg scheme.

My coverage of HK matters that most ang moh, and our constructive, nation-building media MSM miss covering

Interesting, relevant, little known facts about HK’s general strike

HK: Inconvenient truths for China and West/ FT PAP missed

HK protestors prove George Orwell’s point

Why Hongkies sang ‘Sing Hallelujah to the Lord’

HK demonstrations: What I’d like to know

How Xi can hurt HK the non violent way

HK: Who is the superhero of protestors and short-sellers?

Reminder to those who republish my pieces with my permission. If you suka suka take things out without my coconsent, you no longer have permission to republish the piece.

  1. can’t imagine there is any “ft’ men in hk who is happy about being paid in hk$.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: