Are people exaggerating the effect a devaluation of the renminbi would have on the Hong Kong dollar?
Structurally, they are not linked, but emotionally, of course they are. If the renminbi devalues, it becomes a more competitive currency. It would then encourage more exports, and Hong Kong would benefit immediately from all the services provided for the exports. If the renminbi devalued, it would also bring about another cycle of devaluation around Asia, from Korea down to Singapore dollars. That will [put] additional pressure on the HK dollar to see if it would maintain the current state of parity. I want regional stability rather than a short-term export growth. Q: How long would it take to prepare to change the peg? When you look to the future, don’t you see the Hong Kong dollar pegged to the renminbi and not the U.S. dollar? A: The renminbi and Hong Kong dollar have to remain as two separate currencies for at least 50 years, until the year 2047, under the law. So, forget about going back to renminbi. It won’t happen. As a linkage to the renminbi, that’s a natural development. But
Related Questions
- How could Bonds rise to these levels, given the possibility of a contemporaneous Dollar devaluation - perhaps in half?
- How will the rising cost of travel and devaluation of the dollar affect honeymoon destinations?
- Where can I buy the ten dollar necklace featured in Peoples February 2009 Style Watch issue?
