As far as I know, let's put forth all possible information ♪ Master USD/HKD (pegged currency) trading!

So, last timePegged currencies (currency pegging system) USD/HKD (US dollar / Hong Kong dollar)was discussed.

Basically, the rate moves due to interest rate differentials, and as long as positive swaps continue, you can keep making money with a no-loss-at-cut strategy on pegged currency pairs.

This time I’ll share everything from my actual experiences investing several million yen, trading with many companies both domestically and abroad.
…However, it’s probably been many years, so I’ll likely have forgotten a lotPlease forgive me

Bulleted list in order of memory.

・With domestic brokers, a Saxo-type broker offering 100x leverage was advantageous. Even among Saxo-type, spreads differed. I think swaps were the same. At the time, the main Saxo Bank hadn’t come to Japan, kakaku.FX was popular. Also, for USD/HKD, a Saxo-type broker called Astomax was advantageous.

・Now, Saxo-type is only the real SAXO BANK FX. …Recently swap pricing has been poor, and because the selling/buying swap spread is wide, despite rising US rates, negative swaps continue.

Trading under 50,000 units used to incur a minimum charge with Saxo, but this fee has been removed, so you can trade with 10,000 or 5,000 units normally. Since swaps have deteriorated since around this time, with subtle interest differentials, Saxo becomes negative swaps for pegged currencies and is unusable for them currently.

・In the old Forex.com, only one side of the swap was negative, which made pegged currencies suitable, but now both sides have negative swaps, so unusable. FX Online (now IG Securities) allowed special high leverage with stop values, but not anymore. Since swaps worsened, still unusable. Overseas brokers like iFOREX and domestically iTrade were favorable for pegged currencies (iTrade went bankrupt).

・If I were to do it now, domestic brokers would be YJFX. The swap differences for buy/sell are small, with interest settings like FOREX.COM in the past. As noted earlier, around +20 yen is a practical level.Other domestic brokers rarely deal with pegged currencies at all.



・Now, because positive swaps are large but rates have risen, it’s a middle-risk, middle-return situation.

・When rates were stuck at the lower bound, swaps were low but there was no drawdown, so with brokers offering spreads around 3–5, you could buy at the bottom and take profits as they rose slightly. This situation was quite favorable, and even with negative swaps it was worth doing. It’s scary when rate bottoms drop, but USDHKD has defended rates with odd negative interest rates to deter hedge funds, unlike a sudden defense like EUR/CHF. EUR/CHF’s bottoming is well known to have broken.

・Pegged currencies’ maximum loss is easy to calculate. Since the minimum rate is known, calculate 1 pip value and then multiply. If you’re going to place many orders, look up the stop-out percentage. Knowing that YJFX may not stop out immediately even if you drop to 100%, and some overseas brokers have 0% cut, can save a lot of margin you keep in.

・EUR/DKK is a euro-pegged currency. After USD/HKD faded for a while, it looked very attractive, but now both have low interest rates, so due to interest rate differences both are negative. Probably unusable. By the way, the rate fluctuation width is much broader than USD/HKD, so even if it becomes usable, calculating losses up to its lower/upper bounds would require substantial margin.

・Omani rial or Saxo-type options exist for other dollar-pegged currencies too, but most have negative swaps, and since rates are almost fixed with no arbitrage, it seems practically impossible.Even if a positive swap occurs for some reason for a short time, it’s only short-term, so I wouldn’t recommend rushing in (and since minimum charges disappeared, swaps have worsened, so real positives are rarely seen…)

・Dollar-pegged swaps look at short-term rates.If you consider interest rates, you’d expect positive swaps…In those times, Hong Kong dollar short-term rates were high. I used to link banks to check HKD rates, but even then I couldn’t tell whether positives would continue, so it was meaningless.

・With a USD/HKD long, swaps could be negative, but if you bought USDJPY 10,000 units and sold HKDJPY 75,000 units, it could become positive at times. However, as a synthetic position, it’s hard to swing, and swap is unstable; when HKD swap rises, negatives can occur quickly, so it wasn’t easy to profit.Nowadays, you should just buy USD/HKD normally.

Not very cohesive, but that’s roughly what I remembered.
Personally, as a form of risk diversification, if rates drop a bit more and stay with positive swaps, I’d consider moving some into YJFX USDHKD long positions.
I think there is quite some attraction in the current situation


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