HIBOR or the Hong Kong Interbank Offer Rate became infamous earlier this year in January when overnight rate touched above 68 percent as the People’s bank of China (PBoC) drew liquidity from the offshore market via state-owned banks to discourage speculators from pushing the yuan lower and keep a check on yuan volatility.

The rate is gaining prominence in the mainstream media again as it rises but this time around, it may not be for the same reason. This time, it could be risks; risks of a fresh slowdown in the U.S. as well as global economy and the increased possibility of a rate hike from the U.S. Federal Reserve.

On Thursday, there was a sudden spike in the HIBOR funding cost. The rate jumped by 388 basis points to 5.45 percent on Thursday from just 1.57 percent. However, as rates were sliding down on Friday, it was thought to be a one-time phenomenon. But today it is up by more than 80 basis points from Friday’s close to 5.515 percent and that is above the high seen on Thursday.

This spike is coinciding with the turmoil in the capital market that has been materializing since Friday. Since Friday, US benchmark stock index is down more than 70 points, which is more than 3 percent for the index. DAX is down more than 400 points. While equities are sliding, bonds have joined in too. UK 10-year yield is up more than 20 basis points since Friday.

As of now, it is far from clear on what has been creating the turmoil; most remarks are suggesting nervousness surrounding the increased possibility of a rate hike from Fed.