ACTION by the Hong Kong Monetary Authority (HKMA) to support a weak Hong Kong dollar was viewed by global strategists and economists in London as a sensible move. On signs that the Hong Kong dollar was beginning to come under pressure with interbank rates and Exchange Fund yields soaring, market players said the fears experienced in Mexico, after the forced devaluation of the peso, was feeding through into periphery markets such as Hong Kong. Jonathan Griggs, chief economic adviser at Barclays de Zoete Wedd, said these same fears had also been manifested in Thailand and Indonesia. The rupiah has been dumped by offshore banks since last Friday, and the Thai baht was hit yesterday with foreign fears of a devaluation. Mr Griggs said the Philippine peso had escaped because markets were closed as a result of the Pope's visit. 'There is a risk that it will also happen in the Philippines.' Peter Lyon, global strategist at Smith New Court, said that the prompt action of the HKMA to attempt to strengthen the Hong Kong dollar showed the market that it was not willing to tolerate any speculation on its peg to the US dollar. 'The peg has been around for a long time. It is not like the Latin American situation, where pegging is a recent phenomenon.' He said there was a tendency in the market to look carefully at the strength of other pegged currencies, in the wake of the collapse of the peso's peg to the US dollar. However, he said he still regarded the Hong Kong peg as comparatively safe. 'People are looking around for the next one, but the risk of the peg getting removed in Hong Kong is pretty remote.' Peter Chambers, global strategist at James Capel, agreed that the pressure seen in Hong Kong yesterday was purely a short-term reaction to events in Mexico. However, Mr Griggs said that one change in the markets, even after speculation on the pegged currencies and the peso had calmed, would be a continued demand for bigger premiums for investors going into peripheral markets.