, Columnist
Hong Kong Has All But Abandoned the Dollar Peg
A persistent rate gap suggests it’s time for the city to move on from an archaic currency regime.
It’s time for Hong Kong to regain control of its currency.
Photographer: Justin Chin/BloombergInterest rates in Hong Kong have been eerily low, raising the question of whether the city’s dollar peg is now in name only.
Hong Kong surrendered its monetary autonomy decades ago, thanks to a unique mechanism that restricts its currency fluctuation to a narrow band of 7.75 and 7.85 per dollar. That means the city’s borrowing costs move in lockstep with those in the US, which are dictated by the Federal Reserve’s rate policies.