(Bloomberg) -- A gauge of interbank borrowing costs in Hong Kong dropped for the first time in 13 sessions as local stocks retreated following a rally fueled by China’s stimulus blitz.
The one-month Hong Kong Interbank Offered Rate fell 19 basis points to 4.42% on Wednesday. The rate had been on the rise as demand for the local currency increased as Beijing’s stimulus measures boosted the demand for “everything” related to China.
However, Hong Kong stocks have slumped since Tuesday as expectations that China’s National Development and Reform Commission will announce additional stimulus measures at a press briefing were dashed. Data showing slower holiday spending in China than the pre-Covid era also highlighted the need for additional support for the world’s second-largest economy.
“The drop in Hibor rate was due to the disappointment from NDRC meeting, the retracement of Hong Kong stock market led to softer demand for the Hong Kong dollar,” said Carie Li, global market strategist at DBS Bank Ltd. She expects the one-month Hibor to fall toward 4.2% in the absence of a stocks rebound over the coming weeks.
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