HONG KONG: China's national security law for Hong Kong and moves by the United States to begin withdrawing privileges enjoyed by the city under U.S. law have unsettled investors.
They have also raised fears about the stability of the Hong Kong dollar's 36-year old peg to its U.S. counterpart, prompting local officials to issue several reassurances.The HKD is pegged in a narrow range of 7.75-7.85 to the U.S. dollar. The Hong Kong Monetary Authority buys and sells the currency at either limit to maintain the range. Buying HKD boosts it by reducing its availability and raises the costs of betting against the currency. Sales do the opposite.
To maintain the peg, official Hong Kong interest rates track U.S. monetary policy. The currency's movement within the band is influenced by differences between market interest rates in both. Hong Kong interbank rates are higher than their U.S. equivalents, helping keep the HKD strong in spite of concerns about outflows related to the new law.
A Bloomberg report suggested this week that U.S. President Donald Trump's policy advisers explored that option, though the idea did not gain any traction. "For the U.S. dollar, exorbitant privilege is not risk-free," Geoff Yu, senior EMEA market strategist at BNY Mellon, said in a note."The bottom line is that current rhetoric surrounding the Hong Kong dollar peg will likely stay as rhetoric."
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
China opens secret police HQ in Hong Kong | New Straits TimesHONG KONG: China opened a new office on Wednesday for its intelligence agents to operate openly in Hong Kong for the first time under a tough new security law, in a public display of its tightening control over the finance hub.
Read more »
China converts Hong Kong hotel into new national security officeBooks have been removed from public libraries while slogans and anthems are now banned. FMTNews NationalSecurityLaw China HongKong
Read more »
Hong Kong reports jump in local coronavirus infections for 2nd day | Malay MailHONG KONG, July 9 — Hong Kong reported 42 new coronavirus cases today, of which 34 were locally transmitted, marking the second consecutive day of a jump in local infections and fuelling fears of renewed community spread. The total number of cases in the global financial hub since late January...
Read more »
Hong Kong registers highest daily tally in new virus outbreakAt least 12 new infections in the last five days have been classified as unknown in origin FMTNews Covid19 HongKong
Read more »
Australia warns citizens in Hong Kong of detention risk | The Malaysian InsightIn updated travel warning certain to anger Beijing, foreign ministry urges nationals to 'reconsider your need to remain' in the Chinese territory.
Read more »