The Hong Kong Monetary Authority (HKMA) has reiterated its commitment to maintaining the Hong Kong dollar’s peg to the US dollar. This announcement comes in response to increased market speculation regarding a potential change in the exchange rate regime.

According to HKMA officials, the US dollar peg remains the most appropriate arrangement for Hong Kong, given its economic structure and its role as an international financial center. They emphasized the stability and predictability that the peg provides, which is crucial for maintaining investor confidence and facilitating trade and investment flows.

The HKMA also highlighted its strong financial position, with substantial foreign exchange reserves, which it stands ready to deploy to defend the peg if necessary. This commitment aims to reassure markets that the HKMA has the resources and the determination to maintain the current exchange rate system.

The peg, established in 1983, links the Hong Kong dollar to the US dollar at a rate of around 7.80 HKD per 1 USD. The HKMA intervenes in the market to maintain the exchange rate within a narrow band around this level.

Despite periodic debates about the suitability of the peg, particularly in light of fluctuations in the US dollar and changes in the global economic landscape, the HKMA has consistently reaffirmed its commitment to the system. The authorities believe that the benefits of stability and credibility outweigh the potential drawbacks of reduced monetary policy flexibility.

The HKMA’s latest statement is intended to quell any uncertainty in the market and to reinforce its long-standing policy of maintaining the Hong Kong dollar’s link to the US dollar.