No Plan To Change Dollar Peg, Says Paul Chan

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2020-06-01 HKT 17:11

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  • No plan to change dollar peg, says Paul Chan

Financial Secretary Paul Chan said on Monday that there was no plan to remove the local currency’s peg to the US dollar and said the government was confident of defending the Hong Kong dollar exchange rate.

After Beijing last week approved the move to impose a new security law on Hong Kong, Washington said it would take away the SAR's special trade status, adding to the economic gloom and dire warnings from some experts.

This has fuelled speculations that the dollar peg could be in danger, while some media reports indicated that demand for US dollars has increased in the local market.

But Chan said the government has sufficient funds to defend the local currency.

He also repeated an observation he made over the weekend that there was no significant flow of funds out of Hong Kong after Beijing unveiled the legislation plan.

Earlier he told lawmakers that there's no need at present to review his economic forecast for Hong Kong due to the US move, and said he hopes the local economy will emerge from its trough in the second half of the year.

The city has recorded one of its worst economic slumps after being battered by the China-US tariff war, year-long protests against the government and a global economic plunge linked to the coronavirus pandemic.

But Chan told a Legco panel that if the local epidemic situation remains under control then major trading partners will be able to help restart the economy, referring to the HK$290 billion support measures unveiled by the government earlier this year.

“Hong Kong’s economy will hopefully bottom out in the second half of the year,” Chan said.

The financial secretary also told lawmakers that the government is keeping its forecast from late April unchanged.

“We have taken into account the pandemic of Covid-19 and conducted an assessment. We assessed there would be an economic contraction between by about 4 to 7 percent,” said the financial chief.

“With the legislation of the national security law … the govt has been talking to different sectors. The business sector said that given last year’s violent incidents as well as the emergence of separatism, the most important thing is to restore law and order and stability,” he said.

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