Hong Kong Overnight Funding Costs Surge to Highest Since 2007

(Bloomberg) — The cost to borrow overnight in Hong Kong jumped to a 16-year high as official efforts to maintain the city’s currency peg with the U.S. dollar cascaded through funding markets.

The overnight Hong Kong interbank offered rate, known as HIBOR, climbed 37 basis points, or 0.37 of a percentage point, to 4.81% Thursday. That was the highest level since 2007. While the rise offers support to the Hong Kong dollar, the size of the move is most likely a side effect of the amount of cash the Hong Kong Monetary Authority (HKMA) has drained from the system to push borrowing costs higher.