THE question of whether Hong Kong (HK) should de-peg its currency against the US dollar (USD) has been a subject of debate for a long time. The recent dollar weakness and intervention by the HK Monetary Authority (HKMA) to maintain the peg suggest that it is time for HK to de-peg.
The HK$7.80 peg and within a tight band of between 7.75 and 7.85 to the dollar was established in 1983 under a linked exchange rate system. Nevertheless, the HKMA does not actively intervene in the foreign exchange market to maintain the peg.
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