But HK$ will never be supplanted, given the US dollar peg, says Joseph Yam The value of the yuan could equal or surpass that of the Hong Kong dollar before the year is out, Monetary Authority chief executive Joseph Yam Chi-kwong predicted last night. But he sought to ease market concerns that, if this happened, the mainland currency would supplant the Hong Kong dollar in the city. A top banker echoed Mr Yam's view the yuan could surpass the local currency 'in the short term'. Speaking in interviews with four Hong Kong television channels, the city's de facto central banker said the value of the dollar would not be affected no matter how much the yuan strengthened because Hong Kong had its own currency policy - the peg to the US dollar. His comments came at the end of a week which has seen the yuan rise to 8.0073 to the US dollar - its highest valuation since July's 2.1 per cent revaluation of the mainland currency. Investors are betting that Beijing will face pressure to allow the yuan to strengthen more rapidly against the US dollar when President Hu Jintao visits the United States this month. Last year's revaluation followed strong pressure from Washington, which is struggling to control the ballooning US trade deficit, much of it due to cheap Chinese exports. Its trade deficit with China widened to a record US$202 billion last year. A spokesman for Mr Yam said his core message in the four interviews was that the Hong Kong dollar's position would not change. But Mr Yam had not given the interviews in response to concerns the local currency could be supplanted, the spokesman said. Last night one Hong Kong dollar was worth 1.0327 yuan. Mr Yam said many people believed that a value of 7.8 yuan per US dollar - or 1 yuan to 1 Hong Kong dollar - would be a psychological resistance point, but he did not take that view. 'Whether the ratio [of the Hong Kong dollar to the yuan] is 1.1 or 0.9, it [will] merely [have] a psychological effect, not a real impact [on the Hong Kong currency],' he said on Cable TV. If that 'psychological resistance point' was reached, hot money would flow into Hong Kong for a while - though it would 'leave after they found that we will not change our currency policy and they cannot use the Hong Kong currency to speculate on the yuan's value', he predicted. Another important message in the interviews, the spokesman said, was Mr Yam had no plans to retire. Speaking separately, HSBC executive director Peter Wong Tung-shun said he expected the yuan to appreciate by 3 per cent to 5 per cent in the short term. The bank's chairman, Vincent Cheng Hoi-chuen, said he expected the yuan to appreciate in a 'stable' manner. David Li Kwok-po, chairman and chief executive of Bank of East Asia, said: 'The yuan will become a global currency.'