Fed monetary tightening cycle (and the accompanying rise in the dollar that takes place most of the time) have very often resulted in financial "accidents". For several months, some investors have been betting on such an event happening in Hong Kong. Indeed, some well-known hedge funds - including Bill Hackman's Pershing Square - have accumulated short positions on the Hong Kong dollar (HKD), anticipating the end of the peg with the US dollar.
For these investors, the economic and social costs of maintaining the Hong Kong dollar at parity with the US dollar have become untenable and may force the Hong Kong monetary authorities to abandon it.
Could this really happen?