Hong Kong Overnight Funding Costs Double in Sign of Cash Squeeze

The cost to borrow overnight in Hong Kong jumped the most in at least 17 years, with market watchers pointing to stress in the global financial system as well as cash hoarding by banks ahead of the Federal Reserve rate decision and the quarter-end.

The overnight Hong Kong interbank offered rate, known as Hibor, surged 253 basis points to 4.14% on Tuesday. That’s biggest gain since data compiled by Bloomberg that began in 2006. The one-month gauge increased by 51 basis points, the most since 2008.

The cash squeeze came after the Hang Seng Index slumped on Monday, led ...