Macroeconomic Forecast Hong Kong

The Hong Kong Monetary Authority (HKMA) continues to be forced to intervene in the foreign exchange rate market to stem a rise in the domestic currency and keep it within the official HKD7.7500-7.8500/US$ trading band allowed under the territory's currency board arrangement. With the Hong Kong dollar considered a relative safe haven, we expect demand for the currency to remain strong as risk-averse investors continue pouring funds into the territory. However, although the recent unilateral interest rate cuts undertaken by the HKMA and HKD strength are causes for concern regarding the longevity of the territory's exchange-rate regime, we nonetheless retain our view that the dollar peg will hold in the short- to medium-term.

To read the full article, please choose one of the following options: