Should Hong Kong Dollar Depeg with USD Essay

August 17, 2017 Management

Since Joseph Yam had mentioned by June 2012that it should be clip to name for a reappraisal of the nexus to dollar. This reminded us to concentrate back on this 29-year-old currency associating system of HKD to USD. It was a really good / effectual system to assist Hong Kong to stay stable under the economic convulsion when foremost applied in 1983. This formed a really steadfast ‘firewall’ to protect the stableness of the Hong Kong Dollar. We besides had the testimony for the effectivity of this system while the economic crisis that happened in 1997 and 2007.

Although the Hong Kong Government had shown their trueness of nail downing the Hong Kong Dollar to U. S. currency and had announced that there are no programs to set such nexus. But I truly agree with Joseph Yam that it should be clip to name for a reappraisal. Since we all know that Hong Kong is holding a higher and higher rising prices rate that makes the whole metropolis suffer. Equally good as most of the rising prices we sing are imported rising prices. We may happen that U. S. is looking to hold a down incline economic tendency and their currency is a batch weaker than earlier. particularly against RMB.

If Hong Kong still insists to nail down HKD with U. S. currency that means we will. to some extend. holding the same tendency and hereafter with the province i. e. worsening. Furthermore. Hong Kong is a topographic point that chiefly depends on import and about all our day-to-day necessities are imported from other states and of which. chiefly from Mainland China. RMB is now holding a really strong appreciating tendency from which HKD had depreciated 40 % to 50 % against RMB in the past decennary. And we found that the monetary value of nutrient and merchandises that imported from China is going more and more expensive.

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That truly makes the whole metropolis suffer. I am rather agreed with what William Ackman. laminitis of hedge fund Pershing Square Capital Management LP. said in September that he had placed a bet that would gain if Hong Kong allows its currency to appreciate against the dollar to control rising prices. Besides to exchange the linking of HKD from USD to RMB in the coming three to six old ages. This is one of the effectual ways to let go of the painful state of affairs we are presently sing. Lets non afraid of altering from the 29-year-old policy to a new and aggressive format.

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