HK Dollar Peg Faces Fresh Calls for Review Amid Global Currency Shifts

The Hong Kong dollar's four-decade-old peg to the US dollar is facing renewed calls for review, after the local financial industry body, the HKSFPA, urged greater use of the yuan and floated the idea of shifting to a basket of major currencies and gold.

The proposal was submitted as part of the government's first-ever five-year plan, which seeks public feedback on potential currency reforms. The association recommended forming an independent expert committee to chart Hong Kong's financial future and examine currency changes, co-led by the HKMA and the Financial Services and Treasury Bureau.

The current peg system is criticized for ceding control over local monetary policy to the US Federal Reserve, with some arguing that it leaves Hong Kong vulnerable to dollar volatility. The association noted that during recent rate-hike cycles, financial pressure on local homebuyers and small businesses has increased.

Analysts argue that any major changes to the peg system are unlikely, but the proposal coincides with a broader global debate about 'de-dollarisation' as well as Beijing's push to expand the yuan's international use through Hong Kong's offshore market.