Bloomberg News

RBS Lueth Says Hong Kong Dollar Peg Will Stay for Next 10 Years

June 12, 2012

Erik Lueth, a Hong Kong-based senior regional economist at Royal Bank of Scotland Group Plc, comments on the city’s currency peg after former monetary chief Joseph Yam called for a review. Lueth made his comments in a research note today.

“Yam’s comments are significant given his former role and the fact that he helped create and defend the peg for the better part of his professional life.

“I don’t believe that the peg will be abandoned over the next seven-10 years and Yam’s intervention should be read as the views of a man who misses the limelight.

“It is true that property prices and transactions are on the rise again after a short hiatus in the second half of 2011. But this is largely attributed to mainland buyers who pay cash- down and wouldn’t be deterred by higher interest rates.

“I also see no indication that the Hong Kong dollar is terribly undervalued.”

“Pegging to the yuan isn’t an option, because it isn’t a convertible currency.”

To contact the reporter on this story: Fion Li in Hong Kong at fli59@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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