Interbank rates jumped yesterday amid concerns about a renewed liquidity shortage after the Hong Kong Monetary Authority forecast a $775 million reduction in the system's liquidity balance on Monday.
Traders said the authority had effected selling orders worth $775 million for US dollars in New York trading on Thursday.
When the deals are settled next Monday, the system's liquidity balance will be reduced by the same amount to $2.705 billion.
The selling orders were said to have been executed soon after US Secretary of State Madeleine Albright presented testimony to the US Congress saying China might devalue the yuan if its most-favoured nation status was not renewed.
The one-month rate rose 125 basis points to 8.5 per cent while the benchmark three-month rate gained 87.5 basis points to 9.125 per cent.
The higher rates boosted the Hong Kong dollar to $7.7485 per US dollar from $7.7492 on Thursday.
