The issue of the Hong Kong dollar peg to the US dollar is once again under discussion.
Some of our financial leaders have said they are opposed to the removal of the peg, as this would bring greater hardship to Hong Kong. I do not understand why. If we look at Europe and the euro, we can see that there is no peg mechanism linked to the US dollar. The fact that the euro has devalued against the US dollar has only been good news for European exports as they have become cheaper. On the other hand imports (including those from Hong Kong and the mainland) have become more expensive, which has given European suppliers a price advantage.
Hong Kong is one of the most expensive places in which to live. If the Hong Kong dollar was devalued, doing business here would become cheaper and this might attract new firms to the SAR. It also would be more affordable for tourists visiting here and this would create more employment opportunities in the tourist industry.
Such a devaluation would not hurt the Hong Kong Government, as it has huge foreign exchange reserves.
Our officials have always emphasised the importance of letting market forces set the price for goods and services, so why should market forces not determine the value of the Hong Kong dollar?
This is what happens to most of the world's currencies.