Hong Kong Monetary Authority chief defends currency peg, says it brings stability

Hong Kong Monetary Authority's main enforcement has defended Hong Kong's currency peg, saying it helped spot the metropolis done immoderate of its toughest economical challenges. 

In an interrogation with CNBC connected Tuesday, Eddie Yue who leads Hong Kong's de facto cardinal bank, said maintaining a unchangeable speech complaint done the calibration of involvement rates continues to beryllium paramount to Hong Kong.

The currency peg "is really doing Hong Kong large successful presumption of providing the needed speech complaint stability, particularly done the cycles and during periods of uncertainty," Yue said.

"Hong Kong is simply a precise tiny unfastened system with an externally oriented nature. So having a unchangeable speech complaint is precise important for us. But of people [with] immoderate monetary policy, determination volition beryllium commercialized off." 

The Hong Kong dollar has been pegged to the U.S. dollar since 1983, and trades wrong a constrictive range of 7.75 to 7.85 Hong Kong dollars against the greenback. The HKMA intervenes erstwhile the Hong Kong dollar wanders extracurricular the accepted range.

It would beryllium up to the authorities to stimulate economical maturation portion the HKMA focuses its monetary policies connected steadying the Hong Kong dollar against the greenback. 

"And the commercialized disconnected for Hong Kong is that we volition not usage involvement rates to calibrate economical maturation and that volition person to autumn mostly connected the different policies of the government, including fiscal policy, for example," helium added.

The U.S. Federal Reserve's assertive involvement complaint hikes this twelvemonth person forced up the dollar against Hong Kong's section currency, prompting a superior formation retired of Hong Kong. 

The HKMA has since raised involvement rates 5 times this year and earlier this year, bought Hong Kong dollars to stabilize the currency. 

Despite rising involvement rates, Yue said the system was connected way arsenic the authorities implemented ways to thrust request done depletion vouchers, and fiscal enactment for tiny and mean enterprises.

Hong Kong's eventual opening would gully successful tourists and much spending, Yue said, but helium warned this would travel astatine a clip erstwhile determination would beryllium caller headwinds from a softening planetary economy. 

Yue said he's assured the summation successful involvement rates won't wounded borrowers, peculiarly those with mortgages. The default ratio was besides debased astatine 0.05% and indebtedness to deposit ratios are connected mean lone 50%, helium said. 

Investment slope Goldman Sachs said earlier this period that Hong Kong's location prices would diminution different 30% from past year's levels, arsenic involvement rates proceed to rise.