HKD peg w/ USD; HKD/CAD

[trade2finind]

Right now I'm getting killed by the crappy HKD/CAD exch rate since HKD is pegged to the USD and USD has been flushing down the toilet for anyone knows how long. Just wondering if this argument makes sense:
-if HKD's peg to the USD is removed, it will probably be overnight and w/o any warning whatsoever
-HKD's value will probably increase immediately, since it will then be pegged to a basket of currencies, or even the RMB
-given this, HKD will finally regain ground over the CAD

Do you think de-pegging is probable? Thoughts? What would you do if most of your assets are in HKD but you eventually need to convert to CAD?

 

[trade2finind]

bump

 

[Martinghoul]

It's impossible to offer a meaningful view on the issues you raise without understanding the HKMA's objectives. I am not an expert, so I will not volunteer any opinions. Still, in my view, a major change of policy, such as de-pegging, will not happen without the HKMA preparing the mkt by communicating their intentions. If I personally were not sure, I'd convert half to CAD now and keep the other half in HKD.

 

[Pippy5000]

The investment by the government of China into USD reserves represents half of their annual GDP output.. This is an amazing amount of money to the Chinese people who have spent decades producing that money. There is also the issue of loaned money to the US being repaid in dollars and only dollars. There is also the issue of collapsing their own economy by making their exports prohibitively expensive to their largest trading partner who supplies them with the food their own farmland cannot produce for their huge population.

In short, they are not going to devalue their greatest investment, starve their population and destroy their own economy to satisy the fantasies of college students who don't like the Iraq war.