Further decline in the Hong Kong dollar is possible if more capital outflows occur in the event of interest rate hikes in the U.S., Hong Kong Finance Secretary John Tsang said Friday.
The recent decline in the HK dollar is within the normal range and the currency is still at half of its strongest position, Tsang said as he left for Beijing to attend the inauguration of the Asian Infrastructure Investment Bank.
Authorities will remain vigilant as a further drop cannot be ruled out if the US interest rate hike leads to an outflow in capital, he added.
Since 1983, Hong Kong had pegged its currency to the US dollar and allows the currency to trade between HK$7.75 to HK$7.85 against the dollar.
The Hong Kong dollar fell more than 0.25 percent against the US dollar on Thursday to a four-year low, triggering speculation that the currency peg will be scrapped.
At 2:30 am ET on Friday, the currency fell to 7.7989 to the US dollar, the lowest since November 1, 2011.
The material has been provided by InstaForex Company – www.instaforex.com