DBS Bank Expects HKMA To Raise Rates Thrice

DBS Bank said on Wednesday that it expects key local interest rates to increase three times this year – by 25 basis points each – raising the best lending rate from the current 5 percent to 5.75 percent.

It said rates may start going up when the aggregate balance of banks falls below HK$100 billion. It is currently at more than HK$146 billion.

DBS said currency interventions by the Hong Kong Monetary Authority will continue to bring down the aggregate balance, and once local rates go up, it expects the local currency will gain some strength.

The authority meanwhile continued its market intervention to support the local currency. It bought HK$5.1 billion during US trading hours on Wednesday morning, after the currency hit the weak end of its trading band.

This is the ninth market intervention since last Thursday. The authority has now mopped up HK$33.7 billion of the currency from the foreign exchange market.