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Leung prompts jitters over dollar peg


Antony Leung

Is Antony Leung Kam-chung, Hong Kong's financial secretary, a political neophyte who blundered badly into a territory sown with hairtrigger mines - or is he a smart operator who knows how to run a softening-up campaign? This is the question sending Hong Kong's chattering classes into a frenzy and giving financial market jitters over the past few weeks.

What has caused the intense speculation are remarks by Leung about the pegging of the Hong Kong dollar to the US greenback. The local currency is fixed at HK$7.80 to the US dollar, a rate that has remained happily steadfast for 17 years, during which none of Leung's predecessors dared to discuss a change, either of the rate or the regime.

The press also treats the link as more or less a taboo subject. In addition, surely finance ministers - above all others - know the golden rule that you do not do anything to encourage markets to speculate about the value of your currency and whether there may be a change in the parity, especially not when your currency is fixed.

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