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Ren Zhigang is full of confidence in the United Exchange System, saying that gambling decouplers will lose their hands as before.

2020-06-12T20:27:51.993Z


Kyle Bass, a US hedge fund manager who has issued a bearish Hong Kong dollar on many occasions, reportedly raised a new fund to bet on a bearish Hong Kong dollar option with a leverage of 200 times, and expects the Hong Kong dollar to decouple from the US dollar in the next 18 months. But the outside world


Financial News

Written by: Zhang Weilun

2020-06-12 22:26

Date of last update: 2020-06-12 22:26

Kyle Bass, a US hedge fund manager who has issued a bearish Hong Kong dollar on many occasions, reportedly raised a new fund to bet on a bearish Hong Kong dollar option with a leverage of 200 times, and expects the Hong Kong dollar to decouple from the US dollar in the next 18 months. However, the outside world is not too cold about Kyle Bass' predictions, and the HKMA pointed out that it has the ability to maintain the linked exchange rate system. Ren Zhigang, a member of the Executive Council and a former president of the HKMA, said in an interview with "Hong Kong News Service" that he has full confidence in the stability of the exchange rate system and the exchange rate of the Hong Kong dollar. Hand off".

Shi Zhigang also advised investors not to step into the traps of fund managers who find reasons to sell short for the Hong Kong dollar for their clients while earning expensive fees.

The Hong Kong dollar has recently been bearish again by investors. (Profile picture)

Exchange rate is stable and suitable for Hong Kong

Ren Zhigang, one of the original designers of the joint exchange system, also pointed out that Hong Kong as an extremely outward-looking economy, most of its economic activities are internationalized, and stable exchange rates are more suitable for arranging related economic activities than floating exchange rates. The single exchange rate is also clearer and easier to operate than a basket of exchange rates. At that time, it was reasonable to choose the most important international currency, namely the US dollar, as the object of pegs.

Although the linked exchange system has been in operation for 37 years, Ren Zhigang believes that Hong Kong’s export-oriented economy and the status of the US dollar’s ​​international currency have not changed in the past 37 years, coupled with long-term improvements and effective operation, proves that the linked exchange system is still the most suitable for Hong Kong .

Linked exchange system has side effects

However, he also pointed out that there are some side effects of linking the Hong Kong dollar to the US dollar. For example, in a continuous low interest rate environment, Hong Kong has to follow the US to implement ultra-low interest rates, resulting in a large amount of capital influx into the real estate sector in Hong Kong and pushing up asset prices. Affected by the new crown pneumonia epidemic this year, the Fed has cut interest rates several times, the U.S. dollar interbank interest rate has fallen, the interbank interest rate in Hong Kong is high, market arbitrage activities and the return of Chinese stocks continue to affect the liquidity of the Hong Kong dollar.

He pointed out that there is no system that is perfect. The price of the Linked Exchange is that Hong Kong does not have an independent monetary policy. The interest rate of the Hong Kong dollar generally follows the interest rate of the US dollar. The level of the US dollar interest rate may not always be suitable for the overall economic situation of Hong Kong. This is the price of stabilizing the exchange rate. If the resulting unreasonable economic situation, such as asset price increases, it is necessary to deal with fiscal or targeted policies.

Ren Zhigang pointed out that the current financial risks faced by Hong Kong are much different than in the past. On the one hand, the economy has been suspended due to the epidemic, which has brought financial pressure to various industries and households, affecting the quality of the repayment ability of famous banks. On the other hand, With the deterioration of Sino-US relations, the United States or the weaponization of finances will affect the normal operation of the financial system.

Ren Zhigang has confidence in the link exchange system. (Profile picture)

Proposal to promote renminbi trading in Hong Kong stock market

However, after years of continuous optimization, Ren Zhigang believes that Hong Kong’s monetary and financial system is very capable, and Hong Kong has a strong foreign exchange reserve, a sound monetary system, and a prudent fiscal policy. The banking system also has sufficient capital, large amounts of liquidity, and low leverage. The mode of operation should be no problem in dealing with financial risks.

He also mentioned the possibility of the United States weaponizing finance, which "ringed the bell" for the further internationalization of the renminbi. Hong Kong is an important offshore market for the renminbi. To play a key and important role, the next step should be to promote the renminbi to become one of the trading currencies in offshore capital markets such as the Hong Kong stock market.

[Hong Kong version of National Security Law] Ren Zhigang supports legislation: helps to consolidate Hong Kong’s status as an international financial center

HKMA: If necessary, exchange US dollars to the People's Bank of China said the arrangement is one-way non-deposit and send US dollars to the Mainland

Kyle Bass sniper group fund hits Hong Kong dollar with 200 times leverage

Ren Zhigang Hong Kong dollar exchange rate linked exchange rate system

Source: hk1

All news articles on 2020-06-12

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