Hong Kong : Marginalisation claims rejected.
In an article today, Mr Chan said currency marginalisation occurs when residents lose confidence in their own currency, and it is inappropriate to conclude this has happened based on changes in foreign exchange turnover.
He said the Bank for International Settlements survey showed the average daily turnover of foreign exchange transactions and over-the-counter interest rate derivatives in Hong Kong increased by 18.2% to US$302.5 billion in April, compared with US$256 billion in April 2010.
Trading between the renminbi and other currencies grew significantly in the past three years and accounted for 17.8% of total average daily turnover, close to the 18.2% share of trading between the Hong Kong dollar and other currencies. The increase was mainly driven by the rapid development of Hong Kong s offshore renminbi market.
Mr Chan said renminbi deposits have grown by 11 times since the end of 2008, and now account for about 10% of total deposits in the local banking system. But during this period, Hong Kong dollar deposits also rose 38% to $4.179 trillion, or about 50% of total deposits, which is an average ratio for the past 20 or 30 years. Thus, renminbi deposits are not growing at the expense of Hong Kong dollar deposits.
He said the circulation of renminbi currency in Hong Kong has increased as more visitors come from the Mainland, but the demand for the Hong Kong dollar has continued to grow in the past 12 years. Even with the growing use of electronic payments, the circulation of Hong Kong dollar currency rose from $108 billion at the end of 2001 to $292 billion at the end of 2012.
The ratio of Hong Kong dollar currency in circulation to Hong Kong s GDP also grew from 8% to 14% in the same period, showing the use of the Hong Kong dollar is not declining at all, he said.
2013 Al Bawaba (Albawaba.com)
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