HK$ peg to go by year end, says Deutsche

Deutsche Bank''s chief economist reckons a free float and a devaluation of the HK$ are on the cards.

The Hong Kong government is out of options, according to Deutsche Bank's chief economist in Asia. Speaking at Deutsche's annual Economic Outlook lunch - given to investors - Michael Spencer predicts that the Hong Kong dollar peg will be revalued by the end of 2003.

In his presentation he pointed out that the peg has led to chronic asset deflation in the property sector and a loss of household confidence. Unlike in Singapore, he pointed out, the pain of adjusting down the US dollar value of property prices has been taken in the asset itself - while in Singapore it has been in the value of the currency.

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