Currency Report : Hong Kong Dollar Rate Slips as Share Market Tumbles
24 Feb 2011 at 11 AM - Written by John Cameron
Hong Kong's Financial Secretary John Tsang delivered the annual budget address yesterday, giving cause for optimism regarding the economic situation. He announced that Hong Kong’s economy had expanded by 6.8% last year, largely due to its strong links with China and predicted that GDP would expand by a healthy 4-5% in 2011.
Much of the economic expansion in Hong Kong has been due to wealthy Chinese individuals taking advantage of cheap credit and the weak Hong Kong Dollar to purchase property. This has caused the property market to rise at unprecedented levels, with prices gaining 60% over the last 26 months. Tsang announced that Hong Kong authorities would be releasing further tracts of land for development in order to keep property prices in check. They have also limited the percentage of the property price that purchasers of luxury properties are permitted to borrow and introduced a property sales tax in order to cool price inflation.
These steps taken by Hong Kong’s authorities to control inflation may serve to further weaken the HK Dollar as they are using these measures as an alternative to raising interest rates, causing investors to down-grade their interest rate expectations for Hong Hong for the next 12 months and hurting the Hong Kong Dollar.
Hong Kong’s Hang Seng equities index has endured a torrid week with investors shifting funds out of riskier assets and into the safe haven currencies, with the Yen and Swiss Franc seeing strong gains. The Hong Kong Dollar has progressively weakened against the US Dollar since the first week of November, 2010, when it touched the significant 7.7500 level, the strongest it is allowed to trade to, due to its 7.7500-7.8500 pegging with the greenback. Since then, the HK Dollar has suffered significant weakness and there was little this week to suggest that this trend will be arrested.
STORY LINK Currency Report : Hong Kong Dollar Rate Slips as Share Market Tumbles
Currency Report : Hong Kong Dollar Rate Slips as Share Market Tumbles
Much of the economic expansion in Hong Kong has been due to wealthy Chinese individuals taking advantage of cheap credit and the weak Hong Kong Dollar to purchase property. This has caused the property market to rise at unprecedented levels, with prices gaining 60% over the last 26 months. Tsang announced that Hong Kong authorities would be releasing further tracts of land for development in order to keep property prices in check. They have also limited the percentage of the property price that purchasers of luxury properties are permitted to borrow and introduced a property sales tax in order to cool price inflation.
These steps taken by Hong Kong’s authorities to control inflation may serve to further weaken the HK Dollar as they are using these measures as an alternative to raising interest rates, causing investors to down-grade their interest rate expectations for Hong Hong for the next 12 months and hurting the Hong Kong Dollar.
Hong Kong’s Hang Seng equities index has endured a torrid week with investors shifting funds out of riskier assets and into the safe haven currencies, with the Yen and Swiss Franc seeing strong gains. The Hong Kong Dollar has progressively weakened against the US Dollar since the first week of November, 2010, when it touched the significant 7.7500 level, the strongest it is allowed to trade to, due to its 7.7500-7.8500 pegging with the greenback. Since then, the HK Dollar has suffered significant weakness and there was little this week to suggest that this trend will be arrested.
TAGS: Hong Kong Dollar Forecasts Pound Hong Kong Dollar Forecasts
Leave a Comment
Related Stories:
- Exchange Rate Predictions For The Pound Sterling, Euro, US Dollar and Hong Kong Dollar - May 15, 2012
- Daily Exchange Rate Predictions For The US Dollar, Pound Sterling, Euro and Hong Kong Dollar - April 23, 2012
- Daily Currency Predictions For The Pound Sterling, Euro, US Dollar and Hong Kong Dollar - April 3, 2012
- Currency Rate Predictions For The Pound Sterling, Hong Kong Dollar, US Dollar And Euro For Today - March 14, 2012
- Hong Kong Dollar, Euro, Pound Sterling and US Dollar Currency Forecasts For Today - February 22, 2012
- Pound To Euro rate up, Sterling gains for GBP AUD, CAD, CZK, NZD, PLN, TRY and ZAR - February 11, 2012
- Foreign Exchange Rates : Currency Predictions - GBP, USD, EUR, HKD - February 6, 2012
- Pound To Euro rate up, along with Sterling gains for GBP USD, CAD, CHF, CZK, NOK, PLN, TRY and ZAR - January 20, 2012
- Pound To Euro rate up, along with Sterling gains for GBP AUD, CAD, CHF, CZK, MXN, NOK, PLN, SEK and ZAR - January 13, 2012
Latest News:
- Daily Rate Predictions For The US Dollar, Euro, Pound Sterling and Japanese Yen - May 17, 2012
- Australian and New Zealand Dollars Weaken Again As Bank of England Slashes UK Growth Forecast - May 17, 2012
- Today’s Rate Forecasts For The Pound Sterling, Euro, US Dollar and Australian Dollar - May 16, 2012
- Pound Euro Exchange Rate Spirals As Greece Heads For Second General Election - May 16, 2012
- Exchange Rate Predictions For The Pound Sterling, Euro, US Dollar and Hong Kong Dollar - May 15, 2012
- Pound Euro Exchange Rate Breaches 1.2500 For First Time Since 2008 As Greek Debt Fears Heighten - May 15, 2012
- Currency Exchange Rate Forecasts For The Euro, Pound Sterling, US Dollar and Turkish Lira For Today - May 14, 2012
- Pound Australian Dollar and Pound New Zealand Dollar Rates Could Dip As China Loosens Monetary Policy - May 14, 2012
- Today’s Currency Exchange Rate Predictions For The Euro, Pound Sterling, US Dollar and Arab Emirates Dirham - May 11, 2012
- Pound Euro Exchange Rate Could Head Higher Following Bank of England Decision to Keep QE On Hold - May 11, 2012
Daily Market Updates
Major Currency Forecasts
- Pound Sterling Forecast
- Euro Forecast
- American Dollar Forecast
- Australian Dollar Forecast
- Japanese Yen Forecast
- Swiss Franc Forecast
- New Zealand Dollar Forecast
- Canadian Dollar Forecast
- Norwegian Krone Forecast
- South African Rand Forecast
- Indian Rupee Forecast
- Singapore Dollar Forecast
- UAE Dirhams Forecast
- Turkish Lira Forecast
- Hong Kong Dollar Forecast
Currency Pairs
- Pound Euro Forecast
- Pound Dollar Forecast
- Pound Australian Dollar Forecast
- Pound Yen Forecast
- Pound Swiss Franc Forecast
- Pound NZ Dollar Forecast
- Pound Canadian Dollar Forecast
- Pound Krone Forecast
- Pound Rand Forecast
- Pound Rupee Forecast
- Pound Sing Dollar Forecast
- Pound Dirham Forecast
- Pound Lira Forecast
- Pound HK Dollar Forecast
