SINGAPORE, Mar 20: The Hong Kong dollar is not over-valued, deputy chief executive of the Hong Kong Monetary Authority, Andrew Sheng, said on Friday.Speaking at an industry luncheon on "Asian financial turmoil", Sheng said: "We have been running four years of trade deficits but had a trade surplus in January. It goes to show that on a trade competitive point of view, the Hong Kong dollar is not over-valued."He said the Hong Kong dollar would appear over-valued on a consumer price index basis. "But if you use the export price basis, we are about the same as 1982 and if you use the unit labour cost calculation, we are substantially lower," Sheng said. Sheng reiterated the Hong Kong dollar would remain linked to the US dollar.
The Hong Kong dollar, under a fixed exchange rate regime, has been unscathed from Asia's financial turmoil since the start of the crisis in July while its neighbours' currencies have eroded in value against the greenback.
Sheng, in Singapore to attend a seminar organised by thedefacto bank, The Monetary Authority of Singapore, later told a news briefing the ex-British colony enjoyed a flexible economy that allowed it to adjust to its fixed exchange rate regime.
This flexiblity was afforded by an economy which was largely service-oriented, with a high savings rate and low tax rate. "Hong Kong is not immune to Asia's financial turmoil. But it is a very flexible economy and a service economy. Hong Kong's market is slightly different from markets in Asia, a lot of which are in the manufacturing goods area," Sheng said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
