Just hours before China's central bank lifted its key lending and deposit rates for the first time in almost a decade yesterday, the Hong Kong Monetary Authority sold Hong Kong dollars into the money market to keep the local currency from strengthening too rapidly. By early evening, Asian currencies were tumbling against the greenback, sending analysts scrambling to assess the impact of the rate hike on industries, stock and currency markets, and the global economy. Most assumed the 0.27 percentage point rise in one-year lending and deposit rates, to 5.58 per cent and 2.25 per cent respectively, would cool China's torrid economy and curb demand for energy and raw materials such as steel, coal and alumina. 'If spending on construction and manufacturing - which requires metal and other resources - slows, that's got to be negative for commodities,' said David Thurtell, a commodity strategist at Commonwealth Bank of Australia. Rising borrowing costs may also quell demand for car loans, forcing manufacturers to scale down production in an industry already showing signs of fatigue after years of breakneck growth. China imported a record 151 million tonnes of iron ore in the first nine months of this year, the China Iron and Steel Association said, as steelmakers added capacity to feed the country's construction and carmaking boom. Higher borrowing costs threaten to sap that demand sooner than expected. 'It casts a shadow over China's steel industry, which still has huge new capacity in the pipeline,' said Chalmers Shi, principal market analyst at Hamersley China. 'People had pinned hopes on the high-flying property market.' Crude oil futures fell, as traders surmised that the rate rise would temper China's voracious appetite for energy. New York crude for December delivery had lost 80 US cents to $51.60 as of 10pm last night. Copper fell US$73, or 2.6 per cent, to US$2,727 a tonne on the London Metal Exchange at 12.22pm, the biggest drop since October 14. Aluminium fell 2 per cent to US$1,735 a tonne, the biggest drop in two weeks. Nickel, an ingredient in stainless steel, slumped US$360, or 2.7 per cent, to US$12,980 a tonne, the lowest close since September 17. 'The theory is that the rate rise will slow down [economic] growth not only in China but in the whole region, and that other countries may follow suit and raise their rates too,' said Gerrard Katz, head of foreign exchange spot trading at Standard Chartered Bank. Commodity currencies were taking the biggest hit. The Australian dollar dropped to .7369 against the US dollar from .7460 before the announcement. The Japanese yen weakened to around 106.80 against the dollar from 106.30. The Hong Kong Monetary Authority bought HK$3.88 billion worth of US dollars yesterday after the local currency pushed through HK$7.7750 against the US dollar for the first time since February. The authority has injected HK$9.33 billion into the banking system since October 8 as the Hong Kong dollar gradually strengthened beyond its HK$7.80 peg level One hour after the rate rise, which happened just before 6.30pm, the Hong Kong dollar was changing hands at about HK$7.7840, compared with HK$7.7768 just before the move and an intraday high of HK$7.7728 before the authority's intervention. US Treasury yields shot higher, while the December futures contract on the Dow Jones Industrial Average index fell, indicating that Wall Street would open lower. Some traders cautioned that the longer-term impact of the rate rises remained unclear. 'We have squared up our positions because we want to see what happens in New York overnight,' one Asian currency trader said. Hong Kong economist Bob Behull said: 'The volatility in currency and commodity markets is a classic knee-jerk reaction. The real impact of a rate rise isn't going to be apocalyptic, and further rises, if any, will be implemented very cautiously. The effect on Hong Kong's economy will likely be negligible.' Before the rise, Asian currencies had been strengthening across the board as the US dollar remained under pressure before next week's presidential election. Investors were also more confident about buying regional currencies as a more than 6 per cent decline in oil prices over the past 24 hours was seen to reduce the incentive for Asian central banks to prevent their currencies from appreciating, analysts said.