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Hedge funds are continuing to run Hong Kong dollar carry trades despite a rise in local interest rates, albeit on a much-reduced scale compared with earlier in the year.
Dealers, however, expect a big resurgence in these positions should spot once again hit the bottom of the currency’s trading band, which would force authorities to intervene.
“We think the fast money [hedge funds] are still running some sort of long [US] dollar carry trade,” says a senior Hong Kong-based FX and rates trader at a
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