Daily withdrawal cap and market rumors quashed

Business | Avery Chen and Bloomberg 12 Nov 2019

The Hong Kong Monetary Authority brushed off rumors that the city's de facto central bank would cap daily cash withdrawal from banks.

Rumors spread on social media yesterday as protests escalated, that the government will announce a suspension of work, classes and the stock market under the Emergency Regulations Ordinance, but it was dismissed by a government spokesman.

It was also rumored that the HKMA would lower the cash withdrawal limit to HK$6,000 per account.

The HKMA said the messages were totally false and unfounded. "The Hong Kong banking system is robust and sound, with ample liquidity to meet the needs of the public," it said in a statement, while urging the public to be cautious of rumors and verify information carefully.

Meanwhile, Hong Kong dollar traders are pricing in tighter liquidity, with a gauge tracking the demand for cash jumping to the highest level since early 2016.

The Hong Kong dollar fell 0.02 percent to 7.8311 yesterday after posting its best weekly advance since mid-September. The biggest factor potentially mopping up liquidity is Alibaba Group's plan to start taking orders this week for a massive share sale in Hong Kong. Banks are also likely to be hoarding cash for year-end regulatory checks.

Making matters worse were concerns over capital flight, as citywide protests turned violent when police shot and wounded two demonstrators yesterday morning.

The Hong Kong Interbank Offered Rate overall rallied yesterday, with the one-month Hibor rising 28.2 basis points to 2.1932 percent, hitting a three-month high.

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