Hong Kong’s commitment to city’s currency peg

Hong Kong’s commitment to city’s currency peg

Hong Kong’s new leader, top central banker and financial secretary have all pledged their continuing commitment to the city’s currency peg after a former monetary chief called for reviews with the link to the US dollar. The men said in a joint statement that the government is fully committed to maintaining the peg and has no intention of changing it.

The Hong Kong Dollar rose as much as 0.06 percent to HK.7535 versus the greenback yesterday in the city after the call for a review of the system, before closing little changed at HK.7586. Some economists are suggesting that the currency should be pegged to the upcoming Chinese Yuan whereas others are determined to stick with the US dollar.

The International monetary fund backs the peg saying that it had looked “Very carefully at the exchange-rate system when conducting its most recent annual assessment of Hong Kong’s economy in December. The system is simple, credible, and transparent, is widely understood, and merits continued support,” according to an emailed statement.

Elsewhere the Indian Rupee continues to struggle against the dollar despite India’s central bank implementing measures to shore up the currency. Over the past 12 months the Rupees has plummeted by 25% against the Dollar causing many people to doubt India’s status as an economic powerhouse.

In the United States new figures released today are expected to show that the countries retail sales contracted by 0.2% in May. The news could see the Dollar being stifled slightly and dampen the forecasts for growth in the wider economy. Subdued wage growth paired with the ongoing weakness in the labour market may continue to curb household spending, and a downturn in sales may reignite speculation for another round of quantitative easing as the central bank aims to encourage a sustainable recovery.

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