HONG KONG | advisers in the White House are considering the possibility of attacking the hong kong dollar, pegged against the greenback, in retaliation for the adoption by China of a controversial law on national security, reported Wednesday by Bloomberg News.
According to the american news agency, the idea is to take the parity of exchange, for example by limiting the access of banks in hong kong to the u.s. dollar, is among the reprisals being considered by Washington against Beijing after its decision to submit Hong Kong to a law restricting the freedoms.
This possibility, however, has not been discussed at high level within the administration of u.s. president Donald Trump, according to sources who have requested anonymity, quoted by the news agency.
And analysts consider that such a measure seems to be hardly feasible because of the stir that it would cause on the world markets.
For Stephen Innes of AxiCorp, it is unlikely that the United States is committed on this path that would put in danger the great quantity of assets held by China, and treasuries in particular.
“Second, it could destabilize other currencies indexed to the dollar, especially among the allies of the United States in the world, especially the Middle East,” according to him.
“Thirdly, the instability unimaginable that it would cause in the financial ecosystem of the world, which is based on the dollar, could lead to a massive movement of sales on the american stock markets – perspective honnie by the White House to the approach of the November presidential election”.
Other options including the cancellation of the extradition treaty between Hong Kong and the United States as well as cooperation with the police in the territory are also being explored, according to Bloomberg.
The hong kong dollar had been leaning against the greenback in 1983 in order to ensure a certain stability in a context of uncertainty then that took place the negotiations between London and Beijing on the return of the colony to the bosom of the chinese.
The Hong Kong monetary Authority (Hong Kong Monetary Authority, HKMA), which acts as the central bank of the city, must maintain its currency at about 7.8 dollars hong kong for a us dollar, in order to ensure the stability of the exchange rate.
In recent months, the HKMA was forced to sell billions of dollars in hong kong to maintain this parity, while cash flowing in the financial metropolis due to its interest rates relatively high.
The dollar was trading against or 7.75 Hong Kong dollars on Wednesday.