Japan's Nikkei Closes Below 17,000 As Hong Kong Money-Markets 'Break' Again

With Hong Kong Dollar spot little changed (but pressing the weaker end of its peg band) and 12-month forwards suggesting notable weakness/depegging to come, it appears that the Hong Kong interbank lending debacle is far from over. While overnight money appears stable, 1-week Yuan HIBOR is up 370bps at 11.90%, and 1-month and 3-Month HKD HIBOR just snapped higher ( to Jan 2013 highs and July 2010 highs respectively). It appears comments from Hong Kong Monetray Authority’s Norman Chan that it’s just a matter of time before outflow of funds lead to the local currency hitting the low end of the peg sparked heavy medium-term demand for liquidity. Offshore Yuan is crepping back weaker (as is crude) after an early bounce.

*YUAN 1-WEEK HIBOR RISES 370 BPS TO 11.90%

And while the levels are not as exciting the relative spike is notable in HK interbank markets.

*HONG KONG 3-MONTH HIBOR RISES TO HIGHEST SINCE JUL. 2010