Rules Versus Discretion in Managing the Hong Kong Dollar, 1983–2007

Tony Latter

Chapter 5 in Hong Kong SAR’s Monetary and Exchange Rate Challenges, 2009, pp 95-124 from Palgrave Macmillan

Abstract: Abstract This chapter is concerned with Hong Kong’s exchange rate regime as it has functioned from 1983 to the present day. The regime has variously been described as a link, a peg, and a currency board. For convenience, this paper takes these terms to be synonymous, and therefore elects to call the regime a currency board throughout the period. It is acknowledged, however, that some purists would argue that the regime has not always fulfilled all necessary conditions to be classified as such. What is incontrovertible, from the evidence, is that the arrangements, however they may be described, have been remarkably successful in their primary objective of keeping the exchange rate stable at around US$1 = HK$7.80. Since July 1984, the rate has never diverged from 7.80 by more than 1%.

Keywords: Exchange Rate; Interest Rate; Monetary Policy; Central Bank; Foreign Exchange (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-0-230-59474-6_5

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DOI: 10.1057/9780230594746_5

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