World's Top Carry Trade Renews Debate Over Hong Kong Dollar Peg
An unprecedented disconnect between Hong Kong and US interest rates is fueling the world's top-performing carry trade — and stoking a fresh debate about the long-term appeal of the city's pegged exchange rate.
Hong Kong's currency has slumped in recent weeks toward the weak end of its official trading band against the greenback, after local interest rates fell to a three-year low and widened the discount to their US peers to rarely seen levels. This has fueled demand to use the Hong Kong dollar to invest in the higher-yielding US currency, turning the bet into the world's most rewarding carry trade over the past month by one measure.
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