The Hong Kong dollar is the new safe haven

Reuters: - The Hong Kong Monetary Authority (HKMA) stepped in to the currency market on Saturday for the first time since December 2009 as capital inflows strengthened the Hong Kong dollar, causing it to hit the top end of its trading range.

"The recent increase in demand for the local currency is related to a less strained European market, weakness in the USD and declining US interest rates, which have prompted capital inflows into currency and equity markets in the region," an HKMA spokesman said in a statement.

The Hong Kong dollar (HKD) is a pegged currency (to USD) with fairly low downside risk. If anything the HKD is more likely to be adjusted up. Hong Kong's equities sold off sharply in the spring but have been rallying since early summer as global asset managers are increasing allocations to the city-state. Some view Hong Kong as a safer play on China's market recovery. Whatever the case, it seems that traders have found a new "safe-haven" currency - for now. --http://soberlook.com/2012/10/what-is-displacing-yen-as-safe-haven.html