The Chinese Yuan rose above the Hong Kong Dollar for its first time in 13 years, revealing China's economic prowess and advancement. This has given risen to debates about Hong-Kong's exchange rate linkage to the US. Dollar. The strength of the Yuan may have added tension to whether or not Hong-Kong should reconsider its 23 year old currency peg to the US. Dollar to show closer economic ties with mainland China. ''Breaking 7.80 is psychologically impressive, but it's just a passing point,'' said C. H. Kwan, a Tokyo-based senior fellow at Nomura Institute of Capital Markets Research, a unit of Japan's biggest brokerage. ''The Hong Kong dollar is likely to remain pegged to the U.S. dollar at a central rate of 7.80 in coming years.''
In forextrading, the Chinese Yuan went up 1.0002 per Hong Kong Dollar and climbed 0.16 percent to 7.7950 to the US. Dollar, which is its largest rise in six weeks. Despite rising over that 'psychological level', Joseph Yam, the HKMA Chief said on August 25 that a 7.80 Yuan level won't play a role in Hong Kong's currency policy. Despite this, there is talk of a cheaper Hong Kong Dollar in the future. ''The clock is ticking,'' said Sean Callow, a senior currency strategist at Westpac. ''If you ask any Asian policy makers, they're in agreement that the U.S. dollar is heading lower in the long term. This makes the Hong Kong dollar look unnecessarily cheap.''
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