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Rogers urges SAR to ditch HK dollar in yuan switch

Benjamin Scent

Tuesday, November 13, 2007

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Investment guru Jim Rogers, the bow- tied sage known as the "Commodities King," yesterday said the SAR government should adopt the yuan as the official currency of the territory.

The Hong Kong dollar is a historical anomaly, he said.

"This is 2007; I don't know why the Hong Kong dollar exists any more," Rogers said via video link from Singapore. "You have a gigantic neighbor who is becoming the most incredible economy in the world."

Rogers said he would like to see Hong Kong convert to a yuan-based economy as soon as possible, adding that such a change would not be possible until the yuan is freely convertible.

"I'm terribly pessimistic about the future of the [US] dollar," Rogers said. "Most people in the world, if they want to use a currency in the future, will be using the renminbi."

The 65-year-old investor, who helped launch the Quantum Fund with George Soros, said he would not be surprised if China allows the yuan to become freely convertible before next year's Beijing Olympics.

"I would certainly expect [that] by 2010 - at the latest - if not by the Olympics next year," he said. "It's causing bubbles within the Chinese economy."

He called the US dollar "a terribly flawed currency" that would continue to have problems for years to come.

"Will the US dollar lose 80 percent of its value? Probably," Rogers said.

"It's not going to happen next year. But, yes, the US dollar will lose an enormous amount of its value over the next many years," he added.

Rogers said the United States might already be in a recession. "If it's not a recession now, it certainly will be soon," he said.

The state of many parts of the US economy - including the housing, automotive, financial, and machinery sectors - is already "worse than recession," he added.

Meanwhile, Rogers said he is not optimistic about any equities markets.

"I own some equities, but I don't know any equity markets in the world where I would be buying right now," Rogers said.

He said commodities are the only bull market in the world right now, excluding a few currencies he is bullish about.

"Oil has to go to US$150 (HK$1,170)," he said. "It has to go to US$200, because nobody's been discovering oil."

However, Rogers said he hopes to hold on to his A shares forever.

"I hope to give my Chinese shares to my daughter some day," he said.


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