THE Hong Kong Monetary Authority (HKMA) has widened the bid and offer band for its overnight interbank rate by 100 basis points, adding another bow to its string in the event it may have to fend off fresh attacks by currency speculators.
Yesterday, the authority said: 'A wider LAF [liquidity adjustment facility] corridor is considered appropriate to provide more room for the overnight interbank interest rate to move to reflect conditions in the interbank market.' Amsteel Securities research head Edward Chan said: 'It's a cautionary measure to fend off speculators.' With effect as of yesterday, the bid and offer rates under the liquidity adjustment facility are 4 per cent and 7 per cent.
The band had been between 4.25 per cent and 6.25 per cent.
The monetary authority said that the LAF rates and the width of the LAF corridor would be reviewed from time to time in the light of market conditions.
This was seen as a sign that it intended to remain vigilant in the face of continued volatility in the financial markets across Southeast Asia.
Since the inception of the band in June, 1992, its width had been maintained at 200 basis points and is now 300 basis points.
