Financial Secretary Donald Tsang Yam-kuen sought to untangle himself yesterday from the controversy caused by his suggestion that Hong Kong could abandon the peg to the US dollar for a common Asian currency.
Mr Tsang's office issued a swift rebuttal of the report published in the Straits Times of Singapore, saying the comments were taken 'out of context'.
In the interview, which took place on Wednesday after the East Asia Economic Summit, Mr Tsang was quoted as saying that Hong Kong and Singapore should consider moving to a common currency that could later take in the rest of Asia.
Hong Kong would give up the peg to the US dollar in order to join such a scheme, Mr Tsang was quoted as saying. Officials usually maintain a strict line of supporting the US dollar peg, for fear of encouraging speculators.
The Government had to spend $118 billion to beat off speculation against the Hong Kong dollar in August 1998.
'We are thinking in terms of a horizon of five to seven years. Everyone will have to make a compromise somewhere. Singapore will have to give up its managed float,' Mr Tsang was quoted as saying in the Straits Times.
'I feel brave and courageous in even uttering these words. It's the unthinkable. But we must think the unthinkable now.' However, Mr Tsang's office said yesterday: 'The HK dollar parity with the US dollar has remained rock solid and unchanged. The Government has no intention whatsoever to change the system.' His spokesman said Mr Tsang was responding to a question about the feasibility of an Asian Monetary Union in 'the very long term'.