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The Future of the Renminbi and Its Impact on the Hong Kong Dollar

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  • Yue, Eddie
  • He, Dong

Abstract

This article outlines our thoughts on the following three issues. First, will the renminbi become an international currency in the foreseeable future? Second, what does the international use of the renminbi mean for Hong Kong? Third, should the Hong Kong dollar exchange rate be repegged to the renminbi? We argue that the renminbi is likely to become a major international currency in the future, but the process will most likely be a gradual one, reflecting the particular approach that the authorities in the Mainland have taken to capital account liberalization. We also argue that Hong Kong is well positioned to benefit from the process of the renminbi becoming an international currency. At the same time, we continue to believe in the appropriateness of the link of the Hong Kong dollar exchange rate to the U.S. dollar.

Suggested Citation

  • Yue, Eddie & He, Dong, 2008. "The Future of the Renminbi and Its Impact on the Hong Kong Dollar," MPRA Paper 9953, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:9953
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    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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