Hong Kong's former monetary czar has got it all wrong if "architect of the dollar peg," economist John Greenwood, is to be believed.Joseph Yam Chi-kwong dropped a bombshell this month when he suggested a review of the peg between the Hong Kong and US dollars. The former chief of the Hong Kong Monetary Authority said in an academic paper that the peg with a weak US dollar has led to undesirable outcomes such as inflation.
Greenwood, chief economist at Invesco, sees it differently.
"The US dollar has in fact been a very suitable and sound anchor currency for the Hong Kong dollar for the past 29 years though, of course, there have been times when monetary policy in the US has not been appropriate for Hong Kong."
Greenwood, left, also said linking the local dollar with the yuan is not likely in the near future. Yam has overestimated the speed of the yuan to become an international reserve currency, he said. "In practice, it will take decades before the yuan is any challenge to the US dollar."
