Hong Kong dollar falls to 7.751

It shows ample liquidity in the market.

The Hong Kong dollar spot rate fell from 7.752 two weeks ago to 7.751 last week, which has been viewed as a sign of ample liquidity in the Hong Kong market.

According to the Hong Kong Weekly Liquidity Monitor from CCB International, the VIX rose from 10.85 two weeks ago to 11.23 last week and the Hong Kong Volatility Index also rose, from 11.53 two weeks ago to 12.43 last week.

Both indices are still at low levels, reflecting low market volatility.

Meanwhile, the report also noted that HKMA’s aggregate balance fell HK$9m to reach HK$163.9b last week (ended 27 June) while Hong Kong’s monetary base increased HK$2.0b over the past week, settling at HK$1,256.1b.

Here's more from CCB International:

Hong Kong CPI rises 3.7% YoY in May 2014, the same percentage increase as we saw in April. Netting out the effects of the government's one-off relief measures, Hong Kong’s underlying inflation rate in December 2013 was 3.5%; again, the same as level as in April. The YoY increase in May was mainly driven by price hikes in alcohol and tobacco (up 8.1% YoY) and housing (up 5.0% YoY). In contrast, durable goods prices declined 2.9% YoY.

In May 2014, Hong Kong's total exports and imports of goods both recorded positive YoY growth of 4.9% and 3.7%, respectively, resulting in a trade deficit of US$42.4b. Moderate growth in exports in May was driven by improved performance in advanced markets as well as on the mainland.

Total exports to Asia as a whole grew 3.7% YoY while exports to mainland China increased 3.5% YoY. Apart from Asia, increases were also registered in other regions, in particular Germany (up 9.4% YoY) and in the US (up 4.5% YoY). We attribute higher import figures for Asia to imports from Malaysia (up 50.0% YoY), Taiwan (up 10.1% YoY), Singapore, and mainland China (up 3.0% YoY).