Bill Ackman says Pershing hedge fund is shorting the Hong Kong dollar in bet currency peg will break under US-China decoupling pressure
- US hedge fund Pershing owns a ‘large notional position’ in Hong Kong dollar put options
- The resurgent Hong Kong dollar moved closer to the stronger half of its trading band earlier this week
Bill Ackman, founder of US hedge fund Pershing Square Capital Management, said he is betting against the Hong Kong dollar and its peg with the US dollar.
Pershing owns a “large notional position” in Hong Kong dollar put options – bearish wagers on the currency – he said in a tweet, adding that the peg no longer made sense for Hong Kong.
“In light of the US/China decoupling of recent years, we find it particularly surprising, almost embarrassing, for China to continue to peg the HK dollar to the US dollar,” Ackman wrote in a second tweet.
The city’s dollar has been pegged to the US dollar since 1983 and the Hong Kong Monetary Authority, its de facto central bank, has a mandate to keep it trading at HK$7.75 to HK$7.85 per US dollar. Sustained weakness this year has prompted authorities to defend the currency’s peg on multiple occasions, by mopping up liquidity and sending borrowing costs higher.
A representative for the HKMA on Thursday reiterated there is no plan nor need to change the peg system.
The Hong Kong dollar edged higher to around 7.81 per US dollar on Thursday.