HK insurers ramp up dollar hedging activities

Hong Kong protection

A combination of fear of a de-peg between the Hong Kong and US dollar and favourable levels in the forward market has encouraged insurers in Hong Kong to hedge out more of their dollar currency risk.

Hong Kong insurers have historically either been unhedged or they just hedged a smaller proportion of their foreign currency bond investments due to the Hong Kong dollar’s peg to the US dollar, which insulates insurers from the effects of currency fluctuations.

“In the past, it was not worth hedging d

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