Why ending US dollar peg isn't the answer Hong Kong needs
And yet here we are again, with the Hong Kong Monetary Authority (HKMA)
spending upwards of HK$80 billion (US$10.2 billion) since late June to keep the currency within its upper and lower boundaries of 7.75 to 7.85 to the US dollar as speculators test the HKMA's resolve. They trot out long-familiar reasons the peg cannot be sustainable in the long run. Who was it that said that in the long run,
we are all dead
Let's recall that since its creation in October 1983,
the 'dollar peg' , formally known as the Linked Exchange Rate System, has served Hong Kong commendably well. It has delivered stability through the Asian financial crisis, the severe acute respiratory syndrome (Sars) outbreak, the global financial crisis and numerous other disruptions. It has preserved Hong Kong's importance as a global financial hub and seems likely to continue serving us well for the foreseeable future.
Behind every speculative flurry, there usually are some valid concerns. Once upon a time, the main drivers were the political and economic uncertainties linked with Hong Kong's transition from British colonial rule to rule from Beijing. In 2011, the main driver seemed to be anxiety over the
state of the property market . Pandemic dislocations around Sars and Covid-19 have played a role.
Most recently,
the speculative flurry is linked to deepening tensions between the United States and China, as well as US President Donald Trump's efforts to rewrite the rules of global economic and financial engagement.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
South China Morning Post
35 minutes ago
- South China Morning Post
Police slap HK$200,000 bounties on 15 members of subversive ‘Hong Kong Parliament'
The city's national security police have placed a new round of bounties on 15 overseas activists wanted for their involvement in a group called 'Hong Kong Parliament', which the force has deemed subversive and has accused it of violating the Beijing-imposed security law. The HK$200,000 (US$25,640) reward offered for each fugitive was supported by the Office for Safeguarding National Security in Hong Kong, which said the group's actions, including holding an unlawful election 'posed a serious threat to national sovereignty, security and developmental interests of the country'. The activists included members of a Taiwan-based outfit that advocates Hong Kong independence. New arrest warrants were announced on Friday for Chan Lai-chun, Feng Chongyi, Sasha Gong, Ng Man-yan and Tsang Wai-fan, who were accused of establishing a so-called parliament-in-exile in 2022 That year, the group, mainly founded and run by self-exiled activists, formed an 'electoral committee' in Canada to hold elections that it said 'represents, solidifies and revives Hong Kong people's rights of self-determination'. The vote planned in 2022 was postponed to May this year. The group said 15,702 votes were cast to elect 15 members from 18 candidates for its first 'parliament' and a 'virtual swearing-in ceremony' was held on July 14. But five winners refused to be sworn in or announced their departure from the group after winning. Another 10 people were accused by Hong Kong national security police of taking part in the election and swearing in as so-called parliament members – Chin Po-fun, Ha Hoi-chun, Hau Chung-yu, Ho Wing-yau, Alan Keung Ka-wai, Tony Lam, Agnes Ng, Wong Chun-wah, Wong Sau-wo, and Zhang Xinyan.
South China Morning Post
2 hours ago
- South China Morning Post
China promised the Philippines billions in development aid. Why did it fall so short?
China pledged US$30.5 billion in development aid to the Philippines between 2015 and 2023 – the most for any Southeast Asian country – but only a sliver of that funding ever arrived, according to new data from an Australian think tank report. Advertisement Of the total pledged, just US$700 million was actually disbursed – a shortfall analysts attribute to derailed infrastructure projects, changing political winds in Manila and rising tensions with Beijing. These factors have not only stalled flagship ventures under the Belt and Road Initiative but also cast doubt on the long-term viability of Chinese development finance in the region. The report by the Sydney-based Lowy Institute, released on Sunday, found that while the Philippines received the highest total commitment from China among Southeast Asian nations, it ranked near the bottom in actual disbursements. Indonesia, by contrast, received and spent US$20.3 billion out of the US$20.7 billion Beijing had pledged, mostly on energy and transport projects. Philippine President Rodrigo Duterte (left) and his Chinese counterpart Xi Jinping in Beijing in 2017. Duterte pursued closer ties with Beijing through a wave of high-profile infrastructure agreements. Photo: AP The bulk of China's pledged financing to the Philippines was made during the administration of former president Rodrigo Duterte , who held office from 2016 to 2022 and pursued closer ties with Beijing through a wave of high-profile infrastructure agreements.
South China Morning Post
2 hours ago
- South China Morning Post
League of Legends world championship returns to China as mainland esports sector grows
China this year will again serve as host to the League of Legends World Championship , the esports industry's biggest tournament for a single title, raising hopes for another finals run by a mainland team. The annual professional competition, also known as the Worlds, will kick off in Beijing from October 14 and then move to Shanghai for the quarter-final and semi-final rounds from October 28 to November 2, according to US video game developer and tournament organiser Riot Games, a subsidiary of Tencent Holdings The 2025 Worlds final will take place on November 9 in Chengdu , capital of southwestern Sichuan province. This year's competition will see 17 teams vie for prize money and the Summoner's Cup, the trophy awarded to the Worlds final winner. Edward Gaming, a professional esports team based in Shanghai, was the last Chinese group to hoist the Summoner's Cup when they won the 2021 Worlds in Reykjavik, the capital of Iceland Holding the 2025 Worlds in China reflected the strides made on the mainland esports sector, which has become big business, as clubs financed by the country's young tycoons made an impact in the global arena.
