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The US is reportedly threatening to remove the dollar's peg to the Hong Kong dollar. Here's why that's an empty threat from the Trump administration

Posted On: Jul 11, 2020   |   Posted By: Business Insider

Bloomberg reported this week the US might restrict Hong Kong's access to US dollars and potentially spell an end to the Hong Kong dollar's 37-year currency peg to the US dollar.
One analyst, however, rubbished the threats, saying that such a move "would be an act of war" and wouldn't be implemented by the US.
He also said Hong Kong and China both have combined reserves of US dollars of more than 3.5 trillion, which would effectively render the removal of the currency peg pointless.
That's because China and Hong Kong governments could simply use their dollar reserves to prop up the Hong Kong dollar regardless.
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Tensions between the US and China ratcheted up this week after the White House reportedly threatened to remove a long standing peg between the US dollar and the Hong Kong dollar - risking widespread chaos in financial markets - in response to China passing a new security law that increases its grip over the territory.
But the chaos that a dramatic...

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