Why Hong Kong can't cut loose from the US dollar just yet | CNN Business

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'Hong Kong’s currency is facing its biggest test since the global financial crisis of 2008,' writes Laura He | Analysis

The former British colony still pegs the value of its money to that of the US dollar. It’s an arrangement that dates back almost four decades and has long been considered a guarantee of financial stability and prosperity. But in recent months, the Chinese city’s de facto central bank has had to burn through a huge chunk of cash buying Hong Kong dollars to maintain the peg to the US currency.

Higher rates also add to headwinds affecting the city’s property market, which was already facing pressure from an exodus of people and capital due to political turmoil. Beijing has tightened its grip on Hong Kong in recent years, sparking mass protests and drawing global criticism. It imposed a sweeping national security law in 2020, which critics fear makes it easier to crack down on free speech and dissent.

 

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