HK dollar de-peg argument gains new currency

As China angles to increase the yuan’s role in trade and finance, economists are wondering what it means for Hong Kong’s long-time peg to the US dollar.

The will-the-peg-survive question has popped with regular popularity since the late 1990s amidst the Asian financial crisis. One such episode was in November last year when New York hedge fund manager Bill Ackman announced he was betting against the peg.

At the time, Ackman’s Pershing Square Capital Management cited Sino-US decoupling tensions as a rationale. That, he seemed to believe, raised the odds Hong Kong might be forced to end the peg.

And that the turmoil would make the trade profitable, unlike previous attempts by Hayman Capital’s Kyle Bass and George Soros decades before that.