Save HKD Forward Rate Minus Spot Rate
The weak-side Convertibility Undertaking (CU) of HK$7.85 to US$1 under the Linked Exchange Rate system (LERS) was triggered many times by the outflow of funds due to China-US trade war and the internal political crisis in 2019.
HKMA used to follow Fed's each rate hike, but initially HIBOR didn't follow up because there were sufficient funds in the Hong Kong banking system. Gap between LIBOR and HIBOR widened, so arbitrage transaction increased and HKD weakened.
In times where HIBOR is lower than LIBOR, banks borrow HKD from international banks at lower costs and convert into USD to earn higher return. The banks meantime sell Spot HKD and purchase forward HKD futures to avoid loss from drastic depreciation in USD/HKD exchange rate.
HKD 3-month Forward Rate (L)2021-12-077.80
HKD Spot Rate (L)2021-12-077.80
HKD 3-month Forward Rate Minus Spot Rate (R)0.00