The Hong Kong Futures Exchange's (HKFE) panel of forecasters from 10 banks predicts the three-month HIBOR (Hong Kong interbank offer rate) will be nearly a quarter percentage point higher on 15 October. The panel also looks for one-month HIBOR to be near its current level in mid-October. Both predictions appear in the latest edition of the HKFE's "HIBOR Futures Market Update" newsletter, published today.

The panellists' average forecasts for the final settlement prices of One-month and Three-month HIBOR Futures on 15 October show they expect the one-month HIBOR to be 6.22% on that date and the three-month HIBOR to be 6.72%. The forecasts for the one-month rate range from 5.25% to 6.75% and the forecasts for the three-month rate are between 5.56% and 7.38%. On 12 August, cash market rates for one-month and three-month HIBOR were 6.25% and 6.50% respectively.

In the newsletter's front page-article, Terrence Ho, Head of Derivative Trading (HKD) at The Tokai Bank, says "the downtrend in Hong Kong dollar interest rates ended when the US Federal Reserve raised the Fed Funds rate from 4.75% to 5% on 30 June (19)99." Mr. Ho suggests Hong Kong dollar interest rates will move higher on the back of higher US interest rates. He also says tensions between Beijing and Taipei have dampened market sentiment toward HKD interest rates, and he adds: "worry about a possible devaluation of (the) Renminbi has made the situation even worse."

The newsletter's other articles include a review of market activity and highlights from a meeting of market participants.

"HIBOR Futures Market Update" is published by the HKFE's Economic Research Department, and it is available at HKFE offices free of charge to interested members of the public.

The Hong Kong Futures Exchange is a leading futures and options marketplace in the Asia Pacific Region, with a membership of over 130 companies, including a number of major international institutions. The Exchange is actively diversifying its product base, which now includes currency, interest rate and equity-based products.

For further enquiries, please contact HKFE Corporate Communications: Mr. Mark Tung 2842 9448 or Miss Chiu Yeung on 2842 9322.