Remember last autumn, when the air was full of supposed experts predicting a collapse in the mainland and Hong Kong currencies? Major investment houses suggested a devaluation of the yuan was almost inevitable. Smart talk in the broking community was about how it would be impossible for the SAR to defend its US dollar link. They were wrong. Those few willing to put their money where their mouths were lost millions as the only attack on the peg quickly fizzled. Speculators were forced to pay huge sums to cover positions shorting the local currency. Since then, despite all the regional turmoil, no one has dared take on the peg. Now news of negative growth figures has given prophets of devaluation another chance to get back on their hobbyhorse. Some investment houses have reaped free publicity by predicting devaluations of the yuan and, for good measure, the Hong Kong dollar. Their reasons for believing they know better than the leaders of China and the SAR are unclear. If anything, the case against devaluation is stronger now than it was the last time the supposed experts got it wrong. Since last autumn, it has become clear that the sharp depreciations in most other regional currencies has done little to boost their economies. Instead, it only led to inflation and dramatically increased the price of imports, with results in Indonesia plain for all to see. That is not an experience Beijing will wish to emulate. And the immense political capital the mainland and Hong Kong leadership have invested in ruling out devaluation makes any such action almost unthinkable for many years to come. Analysts who suggest that the Hong Kong currency should be devalued by 20 per cent fail to explain what benefits this will bring, as it would still leave the SAR more expensive than its regional neighbours, and fuel inflation through imports. Since a lot of local debt is US dollar denominated, it would also increase costs on that front. There are better ways to restore Hong Kong's competitive position, such as the correction in the property market. Competitiveness is not simply about costs. Factors such as the way of life, the rule of law, economic freedom, freedom of movement and freedom of speech count, too. In such fields, the SAR enjoys incomparable advantages that must be preserved. Some analysts will doubtless continue predicting devaluation. They have been wrong before. There is every reason to expect them to be wrong again.