HK$ has gone up for 4 months and possibly turned exponential at the inflection point near 7.775. Could this be like buying USD inasmuch as HKD is linked to USD?

Eoin Treacy's view

Thank you for this email and there has been speculation of late about the sustainability of the Hong Kong Dollar’s peg against the US Dollar which has resulted in some downward pressure on the former.  

The peg has been in place since 1983 and has survived both reunification with China as well as property booms and busts on the island. With increasing mainland dominance of political life the question of whether Hong Kong will eventually be turned into just another Chinese city is a big one. Whether the peg will eventually be switched to the Renminbi is intrinsically tied to that question. 


Meanwhile if you cast your mind back to The Chart Seminar, one of the first mistakes we can make when looking at charts is to succumb to myopia. The Hong Kong Dollar has traded in a narrow band against the US Dollar, between HKD7.7000 and 7.8500 for 34 years. In that time it has been subject to some quite abrupt short-term volatility but the range has been sustained. Right now the price is rallying from the lower boundary but unless the range fails, it would be premature to question the peg.