Hong Kong’s new monetary chief Eddie Yue vows to defend currency peg, says there’s no need to change it
- Eddie Yue Wai-man, 54, takes over as HKMA’s chief executive from Norman Chan Tak-lam, who retired on Tuesday
- Yue says he plans to maintain the stability of the financial market and the peg linked exchange system that has served the HKMA since it was set up in 1983
Hong Kong’s new monetary chief said that his main priorities were to defend the peg linked system and strengthen the city’s status as an international financial centre and gateway to mainland China.
“We are going to face a lot of challenges, but my team and I plan to maintain the stability of the financial market and the peg linked exchange system ... We see no need and have no intention of changing the peg which is a well-established system. Going forward, we will continue to closely monitor market developments to ensure currency stability and the orderly operation of the money market under the system,” Yue said on his first day in office on Wednesday.
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The peg linked system, established in October 1983, has linked the local currency at HK$7.8 to the US dollar. The HKMA intervenes in the forex markets as required to make sure the Hong Kong dollar trades in the 7.75 to 7.85 range.
Yue, 54, an HKMA veteran has been with the de facto central bank since it was set up in 1993.
In naming Yue as only the third chief executive in HKMA’s history, the government has opted for continuity and stability in such challenging times, analysts said.
The more than year-long trade war and anti-government protests have hit the city’s retail and tourism sectors hard, and may have pushed the economy into a technical recession in the third quarter, Financial Secretary Paul Chan Mo-po said last month.
Yue also said that the HKMA would develop fintech and take steps to strengthen Hong Kong’s role as an international financial centre and gateway to the Greater Bay Area.
“International investors still want to use Hong Kong as a gateway to enter China through the stock and bond connect schemes,” Yue said.
“During my career at the HKMA, I took many different roles to defend the peg and passed through the 1998 Asian financial crisis and 2008 global financial crisis. Although there has been social unrest in recent months, the exchange rate remains stable at 7.84 per dollar and the banking system. We have not seen massive capital outflows from the city,” he said.
Yue was the most experienced among the HKMA’s three deputy chief executives to replace Norman Chan Tak-lam, who retired on Tuesday.
He said the HKMA has urged banks to take a lenient approach while handling loan applications from small and medium-sized enterprises to help them cope with a challenging business environment.
On the decline in Hong Kong dollar deposits and money supply in August, Yue said it was because of initial public offerings had dried up as the protests had hit market sentiment hard. He, however, added that in the first three weeks of September there was an increase in currency deposits.