USD/HKD seen higher at 7.85 by end-2019 - BAML

In its latest client note, the Research Team at Bank of America Merrill Lynch (BAML) offers a bearish outlook on the Hong Kong Dollar (HKD)

Key Quotes:

“HKD liquidity squeeze to dissipate.

HIBOR will then decline, HKD to weaken.

USD/HKD forecast to 7.85 by end of 2019.

HKMZ to defend the currency peg with intervention, this will see the aggregate balance fall, HIBOR rise again (more sustainably) and then a rise in the deposit rate and prime rate in the second half of this year.”