The British Crown Colony of Hong Kong announced last week (6 July) that it was breaking its monetary links with the pound Sterling, pegging its currency instead to the U.
The British Crown Colony of Hong Kong announced last week (6 July) that it was breaking its monetary links with the pound Sterling, pegging its currency instead to the U.S. dollar.
The move -- described by the Hong Kong government as a "temporary" measure -- follows Britain's recent surprise decision to "float" the pound.
The immediate effect on the Colony will be that the price of imported goods will not rise as Sterling floats downwards. At the same time Hong Kong's exports will maintain their competitiveness in all countries, including Britain which takes 14 per cent of the Colony's exports.
SYNOPSIS: In the British Crown Colony of Hong Kong, more financial repercussions cause by Britain's surprise decision to float the poind Sterling. The Colony's Finance Secretary announced last week that Hong Kong will abandon the floating pound in favour of new ties with the U.S. dollars.
The action quickly removed the threat to the Colony's cost of living, since Hong Kong's buying power was felling lower with the pound. The news was said to have been welcomed in most business and banking centres -- the feeling being that much uncertainty had been removed from the business climate.
It's hoped the "new dollar", as it's called, will have a beneficial effect on Hong Kong's traders who -- like this goldsmith -- produce many of their orders for export. The government insists it has not broken its links with Sterling. It says the old relationship will be resumed as soon as Britain restores a fixed rate of exchange for the pound.