The HKD peg to the USD is central to Hong Kong’s role as a global financial centre. This role has served the mainland well after the 1997 handover but more recently has become less relevant to its economic and financial strategy. As a result, the HKD peg and full convertibility could become casualties of the growing tensions between China and the US, and the HKD could get repegged to the CNY.
One Country, Two Systems
The HKD peg establishes a credible monetary policy and supports the full convertibility of the HKD as well as the currency stability that are essential to the functioning of Hong Kong’s financial markets. Based on economic and financial considerations alone, the continuation of the HKD peg would be unquestionable.
In the aftermath of the 1997 handover, Hong Kong’s global financial role and independence under the ‘one country, two systems’ formula have supported mainland domestic and global ambitions well.
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