Updated at 6.33pm: Chief Executive Donald Tsang Yam-kuen on Wednesday said China?s currency, the yuan, was already starting to appreciate.
?The appreciation of renminbi [or yuan] is taking place steadily,? he said. ?I am sure the move is a way in which the mainland authority is going to produce a steady progress of the market as the market matures in the mainland,? Mr Tsang told reporters.
Asked how this would affect Hong Kong?s economy, the chief executive stressed that the territory had ?a very firm monetary base?. ?We are linked to the US dollar. In fact, the appreciation of [yuan] will make Hong Kong?s economy even more competitive ? at least in the short run,? he explained.
Mr Tsang said Hong Kong was well prepared for any further appreciation in China?s currency.
?The various measures which the [Hong Kong] Monetary Authority introduced, for instance, in relation to Hong Kong dollar, tells the market what we are going to do when the Hong Kong dollar becomes too strong, all these are in the present arsenal in dealing with it as far as the monetary regulations are concerned,? he said. ?This provides not only a challenge, but enormous opportunities for Hong Kong.?
In recent months, China has come under considerable pressure to appreciate its currency ? particularly from the United States, which argues that the weak yuan is making mainland exports too cheap and undercutting US manufacturers, forcing some out of business.
