Hong Kong fixes its exchange rate with the US$ at HK$7.8/US$, but the financial market expects a 40% chance of a 20% dev
Posted: Wed Mar 09, 2022 8:40 am
Hong Kong fixes its exchange rate with the US$ at HK$7.8/US$,
but the financial market expects a 40% chance of a 20% devaluation
of the HK$ in the coming month, and a 60% chance of no devaluation.
To maintain the fixed exchange rate at HK$7.8/US$, what is the
required interest rate differential between the HK$ and US$
(measured in annual %)?
but the financial market expects a 40% chance of a 20% devaluation
of the HK$ in the coming month, and a 60% chance of no devaluation.
To maintain the fixed exchange rate at HK$7.8/US$, what is the
required interest rate differential between the HK$ and US$
(measured in annual %)?