Learn Chinese online - 5 billion HKD of hot money left Hong Kong Home Business China International Culture��Edu Sci��Tech Sports Life Travel P hotos ��Search China Observer �� Should foreigners be allowed to join China's civil service? �� Environmental protection at a crucial moment �� Why are Chinese disinclined to show wealth? Photos �� Double-faced embroidery on display �� Red candles lit up the border �� Beijing: Foreigners celebrate Spring Festival ��Home>>Business 5 billion HKD of hot money left Hong Kong www.chinanews.cn 2005-02-04 14:16:28 Chinanews, Feb 3 - Five billion HK dollars of hot money promptly withdrew from Hong Kong in the last two days. Currently, the speculative trend of betting international idle funds on an RMB appreciation seems to have cooled, and instead, hot money is chasing the US Federal Reserve which was expected to announce another rate hike last night, after a succession of previous rate increases. The Hong Kong Monetary Authority (HKMA) announced yesterday that it purchased 1.131 billion Hong Kong dollars against US dollars on Tuesday, the second time it intervened in the foreign exchange market this week. Including buying 3.822 billion HK dollars on Monday, the HKMA has purchased a total of 4.953 billion HK dollars this week. Some experts asserted that this was an indication that nearly five billion HK dollars of hot money had left Hong Kong in a hurry. A pile of international hot money has rushed into Hong Kong to gamble on an RMB appreciation since last September, causing the balances of all Hong Kong banks to soar to more than 15 billion HK dollars from just 3 billion. The HKMA's corresponding policy was to purchase US dollars by selling its own currency from last September till this week. Bank balances thus became the barometer of the amount of funds flowing in and out of the Hong Kong Special Administrative Region. The balances of Hong Kong's banking system consistently remained at the high level of 15.8 billion between last December and last month. However, this week's two large outflow of funds brought it down to 10.848 billion, a one-third decline, and also the first decline in five months. Some experts attributed the outflow of hot money to speculation that the Fed would raise rates by a quarter point, which would further widen the interest rate spread between US and Hong Kong dollars. In order to profit from this rate spread, it was inevitable that funds would leave Hong Kong and bid on US dollar-denominated assets. Besides the Fed's anticipated rate hike, a more profound cause of the outflow of hot money lies in the speculators' disappointment at their failed RMB appreciation theory. E-mail: zhangqinghua@chinanews.com.cn Tel: 8610-88387443 Fax: 8610-68327649 Copyright� 2004 Chinanews.com. All rights reserved. Reproduction in whole or in part without permission is prohibited. Disclaimer: viewpoints in the website do not represent China News Service Learn Chinese, Learn Mandarin online