Cool the HK peg fever (again). It's going nowhere

Hong Kong

RUMOURS of the Hong Kong dollar peg's impending demise have always been vastly exaggerated. This time is no different.

At 7.8321 to one US dollar, the city's currency is close to the weak end of a tightly controlled trading band that centres on 7.8, and allows for moves between 7.75 and 7.85. To extrapolate from that mundane fact that the 35-year-old anchor is about to be swept away is wishful (or fearful) thinking. For one thing, where's the crisis of confidence that would force the currency board system to collapse? Yes, the city's housing prices are bubbly, but with banks like HSBC Holdings Plc paring mortgage rates to as low as 1.25 percentage points over the interbank rate, demand for the world's least affordable property is still intact.