Continued intervention by the Hong Kong Monetary Authority yesterday pushed short-term interest rates slightly lower again after massive demand for recent initial public offerings saw them rising on the previous week.
The one-month Hong Kong interbank offered rate fell to 0.29 per cent from 0.36 per cent on Friday, while overnight Hibor edged lower to 0.53 per cent from 0.7 per cent.
The demand for funds among investors wishing to subscribe to the share offers by Great Wall Automobile and China Life Insurance, which saw hundreds of billions of dollars locked up, had the most impact on the overnight rate, sending it rallying from 0.004 per cent on December 5, while one-month Hibor edged up from 0.125 per cent in the same period.
That pressure on short-term rates is easing as IPO funds are being repaid to investors who did not get the amount applied for. The injection of yet more Hong Kong dollars into the banking system by the HKMA was speeding up that process, dealers said.
The de facto central bank was in the market four times on Monday, buying HK$1.63 billion worth of US dollars. This came after it spent $2.95 billion on US dollar buying on Friday in nine interventions in Hong Kong and London.
'This is part of the HKMA's drive to guide the Hong Kong dollar back to $7.80 [against the US dollar] and more immediately to prevent it from falling below $7.76,' said Pieter van der Schaft, a regional economist with Barclays Capital.