Hong Kong’s US dollar peg explained: history, benefits and risks

As international investors diversify away from US dollar assets and amid the rise of internationalisation of the yuan, there are calls for reviewing the Hong Kong dollar’s peg. Here is what to know about the system. Why is the Hong Kong dollar pegged to the US dollar? The birth of the peg is closely tied to market uncertainties. The currency was once freely traded and in September 1983 slumped by 48 per cent to a record low of HK$9.60 per dollar when a crisis of confidence occurred as the...