Chief Executive Tung Chee-hwa said yesterday there was 'not a chance' that the US dollar peg would change over the next five years.
He made the remark after being asked if comments by Vice-Premier Qian Qichen a week ago that the peg had both good and bad effects on the economy meant there was a chance he might abolish it during his second five-year term.
Mr Tung admitted there were arguments for and against the peg of US$1 to HK$7.80, which has been in place for more than 18 years, but said it had been beneficial most of the time.
He said that Hong Kong should benefit from a recent fall in the value of the US dollar, which has depreciated by about 10 per cent against the Euro and about seven per cent against the yen over the past month. 'We've to watch these changes carefully,' he added.
He admitted that it would take some time for the economy to recover, and noted that there had been deflation of about 13 per cent over the past four years. This was mainly because property values had tumbled by 60 per cent, affecting people's ability to invest and consume, and the mainland's economic development had put pressure on local cost structures.
Mr Tung said large projects such as the opening of Disneyland by late 2005 would help, but said the government was also making many other efforts to revive the economy and tackle unemployment. He added that he was particularly concerned that many young people were both unemployed and not going to school.
