The US dollar has slipped largely against the Hong Kong dollar

The US dollar has also slipped largely against the Hong Kong dollar, with the buck barely taking back its losses to the Asian currency amid the health crisis. The exchange rate has fallen to record lows as the buck loses its shimmer against the HKD. The Hong Kong dollar’s strength is largely due to the fact that the US central bank has slashed key interest rates to zero. The strengthening also follows the Hong Kong Monetary Authority’s decision last week to cut its base rate by 64 basis points to 0.86%, which is comparatively less aggressive than the Fed’s 100-point cut. And because of the gap, the higher-yielding Hong Kong dollar assets are more attractive for investors. In the past month, traders have been buying the US dollar to buy the Hong Kong dollar, making it among the most profitable carry trade in the realm of the forex market. There’s also higher liquidity for the HK currency, with banks hoarding cash for quarterly regulatory checks.