Hong Kong has vowed to keep its US dollar peg, while rejecting a suggestion by former Hong Kong Monetary Authority chief Joseph Yam to review the current Linked Exchange Rate System (LERS) on Tuesday.
Hong Kong Financial Secretary John Tsang said yesterday that "the government is fully committed to maintaining the LERS of Hong Kong. There is no need for a change and the Government will not change it."
He said that the link has served Hong Kong well over the years. It is still the most appropriate system for Hong Kong as a small and open economy, and an international financial center. "Our conclusion remains that the LERS is still the most appropriate system for Hong Kong," HKMA Chief Executive Norman Chan said. "The HKMA considers that the Link should not be changed," he added.
The LERS is "simple, credible, transparent, is widely understood, and merits continued support," reports said citing a statement from the International Monetary Fund. The IMF said it has made a "very careful" assessment of the system in its latest economic review.
Yam on Tuesday suggested that Hong Kong should review its US dollar peg and consider linking its currency to the renminbi. Yam said the HKMA's focus on maintaining the peg could be considered an "obsession or even paranoid".
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