Hongkong'S Linked Exchange Rate System Is Under Pressure Again.

The sharp decline in the Hong Kong dollar has led to a renewed pressure on Hongkong's linked exchange rate system.

Although for other currencies, the 0.3% depreciation rate is not large, Hongkong implements a fixed exchange rate policy which is pegged to the US dollar (linked exchange rate system).

The fluctuation range of HK dollar is 7.75-7.85, and the total fluctuation space is only 1.3%.

In January 14th, the devaluation of the Hong Kong dollar was up to 7.79, and there was still a great distance from 7.85, but it was the weakest day of the Hong Kong dollar since 2012.

Deng Haiqing said that the recent performance of the Hong Kong dollar will lead to market doubts: is the Hongkong linked exchange rate system, which has lasted for 32 years, ended?

There are four main reasons for the depreciation of the Hong Kong dollar: first, the short-term interest rate in Hongkong is out of line with the US short-term interest rate; two, the recent weak performance in Hongkong's real estate and stock market, and the pressure of increasing interest rates in 16 years; three, the return on RMB assets has been significantly reduced, and four is that the Hong Kong dollar has gone through the passive appreciation of the dollar.

Under the above multiple factors, there is a pressure of capital outflow in Hongkong. In addition, the funds needed to devalue Hongkong in the early stage of RMB devaluation need to flow out of Hongkong, exacerbating the devaluation of Hong Kong dollar.

Liu Qiyuan, an analyst at Sino Thai securities, said in his report today that the Hong Kong dollar has accumulated a lot of devaluation pressure.

1990 years ago, Hongkong's comprehensive inflation showed greater elasticity than that of the United States. The combined inflation of Hongkong was higher than that of the United States. The average annual inflation rate of 25 years was 0.97 percentage points. According to the relationship between the depreciation rate of the global main currencies and the comprehensive inflation, the average annual depreciation rate of Hong Kong dollar was 1.3%~1.6% percentage points, and the reasonable price was 10.7 to 11.6 Hong Kong dollars / dollar, which has a devaluation pressure of nearly 30% compared with the current price.

Liu Qiyuan anticipates that the US dollar will still have 10% appreciation in the coming year, which will increase the devaluation pressure of the Hong Kong dollar, and the collapse of the US stock market the day before yesterday is also the fuse for the depreciation of Hong Kong dollar.

Liu Qiyuan believes that in the short term

The US dollar will not be decoupled.

The mainland will be linked to Hongkong's interests, and the mainland will help Hongkong's HKMA stabilize its currency market in the short term.

At present, the mainland is in the process of stabilizing the RMB exchange rate. The fluctuation of Hong Kong dollar is obviously not conducive to the local financial stability in mainland China and Hongkong. Therefore, it is expected that the mainland safe will help the Hongkong monetary authority stabilize Hongkong's foreign exchange market.

The Hongkong monetary authority also stated today that it is determined to maintain stability in the foreign exchange market, which means that Hong Kong dollar will not be decoupled from the US dollar in the near future.

He continued that the medium-term trend of the Hong Kong dollar depends on the trend of the RMB exchange rate.

Because of China

The reserves fell sharply last month, and the intervention by the safe in offshore markets this month will also consume a large amount of foreign exchange reserves, so the decline in foreign exchange reserves may still be accelerating.

The future US economic stall and the acceleration of the US dollar will probably force the renminbi to return to the devaluation trend. Then the devaluation pressure of Hong Kong dollar will be greater than that of now. Whether there will be decoupling of Hong Kong dollar will be uncertain.