The ‘RMB Rising’ conference co-hosted by AsianInvestor and FinanceAsia in Hong Kong at the end of last month raised some key issues about the likely impact of the currency’s liberalisation.
None was more hotly talked about than the possibility that the Hong Kong dollar could be repegged to the renminbi within the next one-to-two years. The issue was discussed in a widely reported panel discussion entitled Impact of RMB Liberalisation on FX Markets (see video clip, below).
This features comments by Peter Redward, managing director and head of emerging Asia research at Barclays Capital, and Dennis Tan, Asia FX strategist for Deutsche Bank.
Redward forecasts up to 10% appreciation of the RMB against the US dollar over the next year, noting that if the effective exchange rate had remained stable since mid-June [it had fallen by 3%], the Hong Kong dollar would have been trading at around Rmb6.23 to the US dollar.
His co-panellist Tan makes a more restrained 5% call, noting that an appreciating currency is consistent with Beijing’s policy to move to a more domestic consumption-driven economy as opposed to an export-driven one.
A previous audio extract also considered what the RMB’s projected rise might mean for Hong Kong. This session featured Benjamin Rudd, head of overseas investment for Ping An of China Asset Management (Hong Kong), and Enoch Fung, Asia economist for Goldman Sachs.
Pictures from the conference are also available on our website.