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Strategies & Market Trends : Asia Forum
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To: Paul Berliner who wrote (5663)8/19/1998 2:12:00 PM
From: Ron Bower  Read Replies (1) of 9980
 
Paul,

I don't think I understand currencies.

If the $HK were traded and the peg were broken, what would happen?

As I understand it, the HKMA has more foreign exchange reserves than there are $HK in circulation. 60% of these funds in $US. Seems to me the value should be equivalent to the assets backing the currency? If the peg were broken, the $HK should go up and I don't understand the pressure to break the peg if the $HK is undervalue. Based on this, it seems to me that the HKMA should let the $HK float.

What determines the value of a currency? The yen and other currencies are falling because...?

Could you or others explain?

TIA,
Ron
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