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Hong Kong is striving to survive the harsh conditions of the global currency wars. On the one hand, the depreciation of the US Dollar, the sluggish performance of the Effective Exchange Rate Index for the Hong Kong Dollar and the inflow of foreign funds into Hong Kong suggest the possibility of a resurgence of an asset bubble; while on the other hand, Hong Kong’s economy, closely linked with the Mainland’s, is experiencing worsening “input inflation” under a record high CPI and rising RMB.
HK SAR’s “unusual measures” to curb the heated real estate market may be able to temporarily prevent the market from skyrocketing. The real challenge facing Hong Kong still lies in inflation, which is not only a serious economic and social welfare problem, but also one of politics.
For details please go to the Chinese version>>
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