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The collapse of Silicon Valley Bank in California is continuing to have negative reverberations throughout the economy and across the finance and tech worlds. Circle, a US-based cryptocurrency [...]
High-profile investors’ long record of failed attempts to break the Hong Kong dollar peg speaks to the strength of the architecture underpinning the scheme. Speculators might believe it is no longer fit for purpose, but their efforts are in vain unless they can outspend and outlast the HKMA.
Bill Ackman, founder of US hedge fund Pershing Square Capital Management, is betting against the Hong Kong dollar, saying that the peg no longer made sense.
Hong Kong’s Linked Exchange Rate System shields it from US dollar strength, while China has taken several steps to ensure yuan stability. While other countries’ currencies are left exposed, these measures give Hong Kong and China protection against unconstrained US dollar volatility.
When the US dollar surges on the foreign exchanges, as it is now, the Hong Kong dollar also gains in value against other major currencies. This strength spells opportunity for Hong Kong investors who want to diversify their portfolios abroad.