In its latest client note, the Research Team at Bank of America Merrill Lynch (BAML) offers a bearish outlook on the Hong Kong Dollar (HKD)
Key Quotes:
“HKD liquidity squeeze to dissipate.
HIBOR will then decline, HKD to weaken.
USD/HKD forecast to 7.85 by end of 2019.
HKMZ to defend the currency peg with intervention, this will see the aggregate balance fall, HIBOR rise again (more sustainably) and then a rise in the deposit rate and prime rate in the second half of this year.”