Financial secretary reiterates no forex control in Hong Kong

By Chen Qingqing in Hong Kong and Ma Jingjing in Beijing Source:Global Times Published: 2019/10/7 21:48:40

A skyline view of Hong Kong at Victoria Harbor Photo: Chen Qingqing/GT

Hong Kong financial secretary reiterated on Sunday that the city will not impose foreign exchange controls, which is guaranteed by the city's Basic Law.

"I noticed that some internet users are concerned whether the Hong Kong Special Administrative Region [HKSAR] government will use its emergency powers to limit capital flows. I want to clearly point out again that Hong Kong will not impose such controls, the Hong Kong dollar can be converted freely and capital can freely flow in and out. This is guaranteed by the Basic Law," Paul Chan Mo-po, financial secretary of the HKSAR, wrote in a blog post in Chinese on the department's website.

Meanwhile, Hong Kong will continue to hold the exchange rate of the Hong Kong dollar against the US dollar stable between 7.75 and 7.85, Chan wrote. 

"Hong Kong's foreign exchange reserves have surpassed $430 billion, over twice the size of its monetary base. Meanwhile, Hong Kong's fiscal reserves stood at HK$1.14 trillion ($145 billion) by the end of July, equivalent to 23 months of fiscal expenditure, or accounting for 38.3 percent of local GDP. All this gives strong support for the Hong Kong dollar," he said.

Meanwhile, markets for foreign exchange, gold, securities, futures and the like shall continue according to the law.

On the same day, the Hong Kong Monetary Authority also denied a rumor that the department will launch a regulation to cap the daily amount of cash withdrawals from banks, saying that the city's banking system is sound enough to provide sufficient capital flow.

Chan said that the Linked Exchange Rate System had helped the authority overcome different economic cycles, and the local banking system is very robust. 

"The average capital adequacy ratio of banks in the city reached 20 percent, and the liquidity coverage rate is 150 percent with only 0.56 percent of nonperforming and bad debt," he noted.

"We are determined, capable and have resources to maintain monetary and financial stability in Hong Kong," he added.

Facing ongoing social unrest, authorities will remain vigilant and come up with preventive measures to keep the financial market stable, the financial secretary said.

Posted in: ECONOMY

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