HKD Carry Trade Demand Puts Currency at Risk of Breaching Trading Band

A surge in demand for carry trades is pushing the Hong Kong dollar toward the weak end of its trading band against the US dollar. According to data from the Depository Trust and Clearing Corp., four times as many US dollar-Hong Kong dollar call options were traded compared to puts on Wednesday, with contracts valued at $100 million or more.

This increase in call options suggests that investors are betting on a depreciation of the Hong Kong dollar against the greenback. Call options gain value if the currency pair advances, while put options rise if it declines.