The supply of interbank liquidity will tighten today after banks sold the local currency to the Hong Kong Monetary Authority for US dollars over the long weekend. The aggregate balance of clearing accounts banks maintain at the HKMA - a measure of interbank liquidity - will drop to a negative $503 million when selling orders are settled. A negative balance means there will not be enough short-term funds to satisfy end-of-the-day settlements. Some banks will need to borrow funds from the HKMA. The overnight Hong Kong interbank rate slid 50 basis points from Friday to 6 per cent. The one-month rate added 12.5 basis points to 5.75 per cent. MONEY MARKET
