HK$ de-Pegging

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  1. #1

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    HK$ de-Pegging

    What would happen IF the HK$ would suddenly de-peg from the US$? would that be good or bad? And if it de-peg would it be up or down from it's present exchange rate? Your thoughts.

    w00t, my 100th post

    Last edited by mengfei; 11-07-2008 at 02:19 PM.

  2. #2

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    It isn't going to happen until the RMB is a fully convertible currency, and when that happens my expectation is that the HKD would align itself with the RMB and quite soon thereafter the RMB would become the defacto currency in HK and the HKD would be withdrawn.

    But it's not going to happen in the next 5 years at least.


  3. #3

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    De-pegging would likely lead to destablizing the Hong Kong dollar as it would be subject to speculation which in a region of some 7 million people would likely not be good if history is any guide to the future.

    If it was pegged to a basket of currencies the HK dollar would achieve the relative stability it has had since it was pegged to the US dollar in 1983.

    This is a guess I don't really know.

    Last edited by Football16; 11-07-2008 at 02:38 PM.

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    >> would likely lead to destablizing the Hong Kong dollar

    Keeping in mind the size of the exchange fund?


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    what a likely scenario there PDLM

    ...but doesn't hk also follow us interest rate? if the us keeps on cutting interest rate wouldn't that be bad for hk specially in the housing sector

    **sorry but my knowledge in finance thingy if very limited**

    Last edited by mengfei; 11-07-2008 at 03:45 PM.

  6. #6

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    What is the actual pegged rate for $1 USD in HKD?
    Is there anywhere I can read up about the history of the pegged rate? (ie.. changes in exchange rate history)


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    Perfect.. thank you


  9. #9

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    Quote Originally Posted by Football16:
    De-pegging would likely lead to destablizing the Hong Kong dollar as it would be subject to speculation which in a region of some 7 million people would likely not be good if history is any guide to the future.

    If it was pegged to a basket of currencies the HK dollar would achieve the relative stability it has had since it was pegged to the US dollar in 1983.

    This is a guess I don't really know.
    i don't know how you get that knowledge that it destablize the currency.

    HK has one of the highest foreign reserves in the world. and in fact, the current peg is maintained by HK MA actually paying people the required 1/7.75 USD per HKD being handed over to them.

    no hedge fund speculators in their right frame of mind would want to attack a currency like HKD...

  10. #10

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    First of all, a de-pegging would certainly not just come by the ways of, say, ok, tomorrow we'll give you only 7 HKD per USD. It would involve either the establishment of a corridor (i.e., HKMA guarantees to give you 7HKD per USD and 1USD per 8HKD) or a peg against a currency basket.

    Either way, a de-pegging would most certainly not destabilize the HKD. Remember, both ways put the HKMA into a more favourable position. Right now, a hedge fund that'd want to attack the HKD can do so risk free - it can go short into the HKD by billions. If it fails, it can return USD against HKD and will only loose the short-sell fee.

    Nonetheless I agree with PDLM that this is a very unlikely move. For the PRC the scenario is quite different, since their inflation is quite a bit higher, ad the population there has more problems coping with the inflation. I wouldnt be surprised to see a 6rmb per USD rate by 2010. But for HK I'm not really sure it makes sense.


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