Hong Kong authorities are once again publicly defending their decision to maintain a peg between the local currency and the US dollar, citing opposing media commentary as the reason for the statement.
The peg between the Hong Kong dollar and the greenback has once again come into the spotlight. For example, Allan Zeman, the so-called father of the local nightlife district Lan Kwai Fong, spoke in April 2024 about how the strengthening Hong Kong dollar amid an economic downturn has led residents to travel and spend elsewhere.
According to Hong Kong Monetary Authority (HKMA) chief Eddie Yue, some of these comments «reflect misconceptions» while others «piece together unrelated news fragments that present an inaccurate picture».
«As the authority responsible for the operation of the Linked Exchange Rate System (LERS), we pay close attention to these comments,» Yue said in a statement.
Stable Monetary Environment
Yue stressed that LERS has demonstrated «remarkable resilience, providing a stable monetary environment» since it was introduced in 1983.
Regarding the issue of economic cycles, he said that limited exchange risk is a «distinct advantage in fostering a conducive environment for business and investment» to attract global investors. He said that recent interest rate cuts led to lower borrowing costs, alongside specific measures to support small and medium-sized enterprises. He also highlighted a $420 billion reserve to allow the HKMA to continue supporting the peg.
«While risk management is important, let’s not be swayed by unfounded concerns. And let me reiterate, we have no intention and we see no need to change the LERS,» Yue said.
