HK slashes interest
By ALLAN NG of Reuters (through NZPA) Hong Kong
Hong Kong, awash in foreign funds amid speculation of a currency revaluation. has pushed interest rates sharply lower in a bid to defend the local dollar.
Monetary officials have repeated long-held policy that no change was planned in the Hong Kong dollar’s peg to the U.S. currency but that failed to halt an influx of speculative money. They threatened to impose fees, or negative interest rates, on big bank deposits, to defend the peg. "Negative interest rates can be arranged easily," the Deputy Secretary for Monetary Affairs, Mr Joseph Yam, told Reuters. “But we are still far from that.”
The Hong Kong dollar has been pegged at 7.80 to one U.S. dollar since October, 1983, when the currency went into a tailspin on fears over the British colony’s political future.
The Government says the peg is needed to maintain stability ahead of the transfer of power to Peking in 1997 as called for under a Sino-Brit-ish accord.
Speculation on a revaluation has emerged through renewed weakness of the U.S. dollar and calls by Washington for the colony to revalue to cut a trade surplus with the United States.
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Press, 2 December 1987, Page 45
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200HK slashes interest Press, 2 December 1987, Page 45
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