A Study on the Effects of Chinese Yuan's Appreciation on Hong Kong's Economic and Financial Markets

Lai, Hoi Wah Katherine (2008) A Study on the Effects of Chinese Yuan's Appreciation on Hong Kong's Economic and Financial Markets. [Dissertation (University of Nottingham only)] (Unpublished)

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The Chinese Yuan (RMB) has been appreciating persistently in

the past years and this rise in value is expected to continue in the next

decade. Although Hong Kong is a Special Administrative Region in

China after the handover in 1997, its currency is still adopting the

fixed exchange rate system against the US Dollar (USD), which is

experiencing continuous depreciation in the past few years. This

contradiction has serious implications on Hong Kong���¢��������s economic and

financial markets both in the near future and in the long run. In the

past few months, there has been a flood of HK dollars (HKD)

deposited in local banks switching over to RMB causing tremendous

pressure on the Hong Kong���¢��������s financial system. China���¢��������s top financial

officials have warned against the rising tide of RMB and, as a

temporary measure to stop the fleeing, have widened the buying and

selling rates for exchanging between RMB and HKD.

This dissertation aims to address these issues and the topic is

discussed in four main parts. In the first part, a literature survey is

carried out on the historical and present relationships among the

three main currencies: HKD, RMB and USD. In the second part, the

current status of RMB and USD and their predicted movements in the

long run are investigated. The third part analyzes the impact of RMB

appreciation on Hong Kong���¢��������s economic and financial system. Hong

Kong���¢��������s past trend of using the Pearl River Delta region in Mainland

China as its industrial and manufacturing hub might have to be

reversed if the trend continues; and how the banking systems and the

stock and property markets will be affected. Furthermore, China���¢��������s

mainland listed A-Stocks versus China���¢��������s Hong Kong listed H-Stocks as

well as the rising property prices just across Hong Kong���¢��������s border are

studied. In the final part, what can be done to alleviate the situation

is addressed and recommendations proposed among three possible

options: pegging with the USD, pegging with RMB and pegging with a

basket of currencies.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 07 Jan 2009
Last Modified: 15 Feb 2018 05:23
URI: https://eprints.nottingham.ac.uk/id/eprint/21969

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