Currency Note Worldwide

Hong Kong dollar on the brink of a struggle

By Ricky Bean January 26th, 2016

Hong Kong is poised to feel the burn in the coming months following the market crash in China, and its pegging of to the dollar being some of the biggest drivers. With investors still worried about the Chinese economic health, global businesses have been pulling funds out of Hong Kong because, unlike China, its financial regulations are in line with that of the West, so the withdrawal of funds is a much simpler process.

The pegging of the currency to the US dollar means that they will need to raise interest rates in line with that of the US, which will mean increased borrowing costs for home-owners. Since Hong Kong has been announced as the having most expensive housing market in the world, we could see a quick re-crowning as house prices are expected to fall by 30% this year, after already falling 8% from peak figures in September.

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