Federal Reserve

Discount window borrowing hits $765m

PUBLISHED : Wednesday, 03 November, 1999, 12:00am
UPDATED : Wednesday, 03 November, 1999, 12:00am

Borrowings for emergency overnight funds from the Hong Kong Monetary Authority's discount window have hit an unusually high level of $765 million.

The sum might have been borrowed by a bank that had miscalculated its short-term funds for the end-of-day clearing, according to money-market dealers.

They said yesterday's overnight rate remained at about 4.5 per cent for most of the day, meaning most banks were able to borrow funds at this rate.

However, borrowings from the discount window should be at the base rate, which yesterday stood at 6.75 per cent.

The dealers said the chances of a number of banks simultaneously miscalculating their positions and borrowing from the discount window was remote.

They suspected the bank in question was probably among the few with the highest Hong Kong dollar transaction volumes because only these banks could make such an error.

Commonwealth Bank of Australia treasurer Andrew Fung Hau-chung said the borrowing caught the market's attention because daily turnover had declined to thin levels as the new year approached.