Letters | As US dollar weakens, time to rethink Hong Kong dollar peg?

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The Hong Kong dollar was linked to the US dollar at HK$7.80 since October 1983, just over 40 years ago. The link was inspired; it was put in place to secure economic confidence and stability at a time when Hong Kong was facing a period of uncertainty. Over the past 42 years, the Linked Exchange Rate System (LERS) has held fast through thick and thin, during challenging global economic conditions and attempts by foreign speculators to change the link rate. The LERS has proven to be robust and has been of great benefit to Hong Kong as a whole.

However, geopolitical uncertainty and volatility are becoming ever more extreme, and the United States president seemingly favours a weak US dollar to remedy trade imbalances. The yuan is increasingly being used in global trade finance, although it is still a long way behind the US dollar. Your front-page report (“PBOC to support HKMA in yuan liquidity surge”, January 27) noted that China’s central bank will provide more funding to allow the Hong Kong Monetary Authority to maintain its yuan liquidity facility at 200 billion yuan and enable banks to offer yuan loans to customers.

A report on the same page (“Number of foreign and mainland firms at record”, January 27) contained the suggestion that as the yuan continues to internationalise, gold trading might in part be denominated in yuan. This would suit Hong Kong’s aspiration to be a gold bullion trading and storage centre.