Morgan Stanley: Hong Kong dollar Hibor may rebound in coming months

The Hong Kong dollar interbank offered rate (Hibor) is likely to rebound from its recent decline in the coming months as some excess liquidity in the market may be reabsorbed, according to Morgan Stanley. Hibor's recent decline can be attributed to three key factors: the Hong Kong Monetary Authority has injected a large amount of Hong Kong dollar liquidity to maintain the exchange rate range; the US dollar selling pressure has eased; and the demand for the Hong Kong dollar from equity inflows has weakened. "We think there is a high probability of a Hibor rebound in the coming months, although the exact timing is difficult to determine." The continued decline in Hong Kong dollar interest rates will have to wait until 2026, when the Federal Reserve is expected to cut interest rates further.