The Hong Kong Monetary Authority has urged local businessmen and investors to focus more on the long-term benefits of the euro than the new currency's short-term volatilities when formulating their business and investment strategies.
Addressing a seminar on the euro yesterday, the authority's deputy chief executive Tony Latter said Hong Kong should be watching with special interest the evolution of the euro and the way in which the associated economic challenges within euroland were tackled.
Since its inception on January, 1 the new currency has been depreciating, lessening investor interest in creating euro deposits and building up euro-asset portfolios.
'When you look at the ups and downs of the relationship between the world's leading currencies over the years, you will recognise that the depreciation in the euro since its inception is not all that exceptional,' Mr Latter said.
Despite being a long way from euroland, Hong Kong should not underestimate the impact the euro was having in terms of cost savings and risk reduction in cross-border trade, he said.
He pointed out the turnover for euro-related foreign-exchange transactions was so far less than that for its predecessor currencies taken together because the rationale for cross trades and arbitrage between the former currencies had evaporated.