Morgan Stanley: Hong Kong Dollar Hibor Likely to Rebound in Coming Months

Morgan Stanley Sees Hibor Reversal Ahead as Liquidity Conditions Tighten

According to Jinshi Data, Morgan Stanley expects the Hong Kong dollar interbank offered rate (Hibor) to rebound in the coming months, following a period of decline driven by temporary liquidity surpluses.

The investment bank notes that recent downward pressure on Hibor was caused by a combination of factors, including:

Heavy liquidity injections by the Hong Kong Monetary Authority (HKMA)

Reduced selling pressure on the U.S. dollar

Diminished demand for Hong Kong dollars amid a slowdown in stock fund inflows

Short-Term Rebound Expected, But Longer-Term Rate Relief Delayed

Morgan Stanley emphasized that although it is difficult to pinpoint an exact timeline, the likelihood of a Hibor rebound is high as the HKMA may begin to reabsorb excess market liquidity.

The firm added that a sustained decline in Hong Kong dollar interest rates is unlikely before 2026, aligning with its broader macro view that the U.S. Federal Reserve will only begin meaningful rate cuts next year.