Publications

- March 1, 2012: Vol. 6, Number 3

To read this full article you need to be subscribed to Institutional Real Estate Europe

The Cost of Money: Why the Hong Kong Currency Peg Interferes with Property Prices

by John Saunders

George Bernard Shawonce said: “If history repeats itself and the unexpected always happens, how incapable must man be of learning from experience?” Never a truer word was spoken in terms of Hong Kong’s current economic predicament.

Hong Kongis one of the few countries in Asia Pacific with a pegged currency, being pegged to the US dollar. The peg has been around in one form or another since 1935; however, Hong Kong’s currency was originally pegged to sterling to reflect the then global reserve status of the pound. By 1972, the US dollar was in the ascendancy, and after a brief swop to a US dollar peg, the currency was allowed to freely float in 1974. Then, in 1983, in a crisis of confidence that led to near runs on the banks, the US dollar peg was reinstated in a modified form and has been with us ever since. The ability for the Hong Kong Monetary Authority to buy and sell the US dollar to maintain a defence against excessive capital inflows and outflows h

Glossary, videos, podcasts, research in the Resource Center

Forgot your username or password?

Close your account?

Your account will be closed and all data will be permanently deleted and cannot be recovered. Are you sure?

We respect your privacy! Please give consent for processing data as described in our Privacy Policy