David Li, chairman and chief executive of Bank of East Asia Ltd. (00023.HK), is proposing to gradually peg the Hong Kong dollar to the renminbi, the Hong Kong Economic Journal reported Tuesday. The Hong Kong currency’s link to the US dollar has contributed to inflation and asset bubbles in the city, especially in view of the US quantitative easing policy, and now is the right time for Hong Kong to review the 30-year peg, Li was quoted as saying. One option could be allowing the Hong Kong dollar to trade against a basket of currencies first, then gradually increasing the renminbi’s weighting in the basket and eventually pegging it to the Chinese currency, he said. This option, however, is possible if the renminbi is fully convertible, Li said, adding that he expects this to happen within five years under a stable global economy.
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