Paul Chan says no plan to ditch dollar peg

Local | 1 Jun 2020 1:09 pm

There are no plans to change Hong Kong's currency’s peg to the U.S. dollar and the city has not seen any “obvious” capital outflows after Washington moved to strip the city of its special status in U.S. law, the Financial Secretary Paul Chan Mo-po said.

He also said the national security law will  help improve the business environment and the status of Hong Kong as a financial center. There was no need to overreact to measures proposed by the US President Donald Trump on Friday, Chan assured.

He said authorities were confident in defending the Hong Kong dollar exchange rate, with foreign exchange reserves twice the size of the entire monetary base and liquidity in the banking system "very healthy and strong," Reuters reports. Chan added capital will continue to flow freely in and out of Hong Kong.

“The impact is likely to be limited and more symbolic while the financial sector is unlikely to be affected,” Sean Darby, Jefferies’ global equity strategist in Hong Kong, wrote in a research note, Bloomberg reports. “We are not too surprised by the move and don’t expect the Hong Kong financial markets to be either.”

 

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