Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (21195)	1/12/2005 7:48:14 PM
From: RealMuLan	Respond to of 116555

HK unlikely to adjust currency peg if China moves - Greenwood 16 Hours,24 minutes Ago [Asia News]: HONG KONG, If China revalues the renminbi it would not be in Hong Kong's interests to follow suit, the architect of the territory's currency peg said on Wednesday. "The Hong Kong dollar is likely to remain fixed vis-a-vis the U.S. dollar," John Greenwood, chief economist of Invesco Group, told a news conference. "Hong Kong is just coming out of deflation and to allow its exchange rate to appreciate now would extend the pain. I think there is unlikely to be a policy shift." The Hong Kong dollar, which is pegged at 7.8 to the U.S. dollar, has drawn upward speculative pressure in the past 18 months as some investors bet that Hong Kong would follow any move by Beijing to let its currency appreciate slightly. Speculation about a change in Hong Kong's currency policy has grown as the territory's economy grows more closely integrated with mainland China's. Greenwood said there would in any case be no need for Hong Kong to follow a renminbi revaluation. "Hong Kong is not pegged to the renminbi. Hong Kong is pegged to the U.S. dollar," he said. U.S. Commerce Secretary Don Evans urged China on Wednesday to adopt a market-drive exchange rate, saying it was the best policy to ensure long-term growth and prosperity. The renminbi is pegged at about 8.28 to the U.S. dollar, making it artificially low, according to many analysts. Greenwood, however, sees the chances of China even widening its trading band to the U.S. dollar this year as remote. "The Chinese authorities are primarily concerned with the banking system and building money in credit markets that are strong and resilient and then gradually freeing up capital flows," he said. "There is less focus on the currency." Japan kept a fixed-exchange rate to the U.S. dollar for 21 years between 1949 and 1971 while its economy was averaging nine percent annual growth, he said. "That is similar to China's economy today," he said. "So there is no reason why China shouldn't maintain a fixed exchange rate provided its domestic policies don't cause overheating of the economy." Greenwood is a member of the Hong Kong Monetary Authority's committee on currency board operations. In 1983, he proposed a regime linking the Hong Kong dollar to the U.S. dollar that was adopted by the government. keralanext.com