Early on Friday, global rating agency Fitch downgraded Hong Kong’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘AA’ from ‘AA+’. It also signaled negative outlook for the IDR of Asian economy.
Key quotes
“Months of persistent conflict and violence are testing the perimeters and pliability of the “one country, two systems” framework.”
“The Negative Outlook reflects our view that even with concessions to some protestor demands, a degree of public discontent is likely to persist.”
“Hong Kong’s considerable financial buffers to nevertheless remain intact.”
FX implications
The Hong Kong Dollar (HKD) dropped across the board after the news with the USD/HKD pair rising to 7.84 by the press time. Investors may search for more news as overall trading sentiment is likely being capped ahead of the US employment data while latest concessions to Hong Kong protesters also dim prospects of the pair’s further upside.
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