Hong Kong Inter Bank Offer Rate (HIBOR) is the price of borrowing in the Hong Kong interbank market, with loan terms ranging from overnight to one year. HIBOR is an important reference rate that reflects the borrowing costs between banks in Hong Kong. In recent news, the Hong Kong overnight HIBOR reached a new high of 4.81%, the first time since 2007, while the 1-month HIBOR increased to 4.53% for 16 consecutive days. This article will explore the topic of HIBOR in more detail, covering its definition, calculation methods, comparison with other interbank rates, and factors influencing its movement.

1. What is HIBOR?

HIBOR, or the Hong Kong Inter Bank Offer Rate, is the interest rate at which banks in Hong Kong lend funds to each other in the interbank market. It serves as a benchmark rate for various financial instruments and loans in Hong Kong. The HIBOR rate is determined for various tenors, ranging from overnight to one year. It is a crucial indicator of liquidity conditions in the Hong Kong market and plays a significant role in the pricing of loans, mortgages, and other financial products.

2. Calculation of HIBOR

The calculation of HIBOR involves a specific methodology to ensure accuracy and fairness. The process includes:

This calculation methodology promotes transparency and reduces the impact of outliers, ensuring a more accurate representation of the underlying borrowing costs.

3. Comparison with LIBOR

LIBOR, or the London Interbank Offered Rate, is another important interbank rate that serves as the global benchmark for various financial products, including derivatives, loans, and mortgages. While HIBOR and LIBOR share similarities as interbank rates, there are some notable differences:

Despite these differences, both HIBOR and LIBOR play crucial roles in their respective markets and serve as important reference rates for financial transactions globally.

4. Factors Influencing HIBOR Rates

Several factors influence the movement of HIBOR rates:

Understanding these factors and monitoring their developments is crucial for market participants to anticipate potential changes in HIBOR rates and make informed decisions.

In conclusion, HIBOR is a benchmark interest rate in the Hong Kong interbank market that plays a crucial role in pricing various financial products. Its calculation methodology, comparison with LIBOR, and factors influencing its movement are essential aspects to consider for market participants and investors. Staying informed about HIBOR rates and their implications can help individuals and businesses make better financial decisions.