Hong Kong banks announces interest rate hike

HSBC, Hang Seng Bank, Standard Chartered, Bank of China (Hong Kong) and the Bank of East Asia said Thursday to raise their prime rate and saving rate 50 basis points effective from May 23.

Hong Kong banks adopt a little bit different prime rate and saving rate. The giant HSBC, Hang Seng bank, Bank of China (Hong Kong ) raised their prime lending rate from 5.25 percent to 5.75 percent and saving rate from 0.25 percent to 0.75 percent. While Standard Chartered Bank, Bank of East Asia raised its prime rate from 5.5 percent to 6 percent, and saving rate from 0.5 percent to 1 percent.

Observers said the interest rate hike is in consideration of the recent outflow of the capital from the local banks, and Hong Kong Monetary Authority (HKMA)'s measures against money speculation.

HKMA announced Wednesday the introduction of three refinements to the operation of the Linked Exchange Rate System, and putting the local dollar into a fixed trading band of 7.75-7.85 to the US dollar.

These measures, aims to slam the door on inflows of "hot money" betting on a renminbi revaluation and forced interest rate higher.

The aggregated balance of local bank system dropped to its normal level of 700 million HK dollars (90 million US dollar) from 3.9 billion HK dollars (500 million US dollars) Wednesday night, forcing the overnight interbank lending rate increased.

Source: Xinhua