Carry Trade Allure Puts Hong Kong Dollar Back on 7.85 Watch

The Hong Kong dollar has weakened toward the lower limit of its trading band against the U.S. dollar, driven by demand for carry trades. The Hong Kong Monetary Authority maintains a trading band for the currency, with 7.85 representing the weak end of that range. Carry trades involve borrowing in one currency and investing proceeds in another, typically to capture interest rate differentials.

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