THE strength of the greenback and expectations of two interest rate rises in the United States will do little to dampen the current economic status of Hong Kong, according to a local banker.
Albert Chiu, deputy managing director and treasury manager of the Republic National Bank of New York, said the Hong Kong dollar being pegged to the greenback had a positive impact on the local economy and had little effect on the property sector.
'I think the property sector will continue to remain strong because of the bullishness we see about 1997 and because of the expectations that Chinese will plough money into the economy soon, especially luxury flats,' he said.
'The basic inbalance on supply and demand of property will probably support the market. Speculators have factored a 0.5 per cent interest rate hike into the US dollar which will also make the Hong Kong interest rate higher.
'But I don't think it will have a major impact on property, the Hong Kong economy or the stock market.' Mr Chiu said the US dollar had a strong first quarter but experienced a major corrections especially against the yen during the second quarter.
During the first quarter, the dollar rose about 10 per cent against most major currencies and increased from 110 to a high of 127 against the yen and from 1.55 to 1.74 against the Deutschemark.
Mr Chiu said a strong US economy and expectations of higher US interest rates were bad news for the world's other major economies, such as Germany and Japan. He said the US dollar had seen some slowdown in the second quarter because of worries about the pace of the country's economy and whether the strength of the first quarter would be repeated.
