The CEO of the Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, rejected any possibility of altering the Hong Kong dollar’s 41-year old peg to the US dollar after some commentators warned of possible changes recently.
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“While risk management is important, let’s not be swayed by unfounded concerns,” Eddie Yue Wai-man said in an article posted on the authority’s website on Thursday.
“And let me reiterate, we have no intention, and we see no need to change the Linked Exchange Rate System [LERS]”
Yue’s reaffirmation of the peg comes after media commentators expressed concern about the outlook for the LERS, as tension between the US and China is expected to escalate after Donald Trump’s return to the White House later this month.
“Despite the recent interest in LERS and even speculation regarding potential geopolitical shocks, the Hong Kong dollar market has continued to operate smoothly in accordance with the design of the LERS,” Yue said.
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The Hong Kong dollar is linked to the US dollar at a fixed exchange rate of HK$7.80 per US dollar, and the HKMA intervenes to make sure the rate stays within a band from HK$7.75 to HK$7.85.