If you’re an expat in Hong Kong, odds are you need to transfer money in and out of the country on occasion. That might mean topping up your Hong Kong account with savings from overseas, or perhaps sending money out of Hong Kong to help your family. Given that, it’s a good idea to keep up with what the Hong Kong dollar’s up to, to find out what sort of exchange rate you’re going to get. So, how has the island’s currency fared in 2012?
US dollar (USD) to Hong Kong dollar (HKD): No change
It actually doesn’t make much sense to ask how the Hong Kong dollar has done against the US dollar this year. This is because the HDK is pegged to the greenback, at a rate of $7.80, and has been so ever since 1983. Hence, whether the US economy goes to the dogs, or Hong Kong’s flies, the rate is $7.80.
In addition, what this peg means is that, when we track how the Hong Kong dollar has changed against other currencies, we’re actually looking at how the US dollar has changed. To put it another way, with most currencies, their value reflects the strength of that economy, because they’re floated and so change value freely. But because the Hong Kong dollar is pegged to the US dollar, its value doen’t reflect the strength of Hong Kong’s economy’s, but that of the US.
UK pound (GBP) to Hong Kong dollar (HKD): +3.883% change
The UK pound has jumped +3.883% against the Hong Kong dollar in 2012, from 12.08 on January 1st to 12.55 at the time of writing. If you have a UK bank account, and wish to transfer money to Hong Kong, the changes this year have hence been to your advantage. What reflects this rising pound? Well, it’s certainly not a strong UK economy. Instead, the US fiscal cliff will have sent haven flows the UK’s way, as the markets seek to avoid the coming $600bn crash.
Euro (EUR) to Hong Kong dollar (HDK): +0.475% change
If you need to transfer money from the Eurozone to Hong Kong, the changes this year have also been beneficial for you. The euro has risen from 10.15 at the start of the year to 10.20 today. This smaller gain reflects the fact of the Eurozone debt crisis, something to which the UK is not directly susceptible. For example, while the euro is unlikely to collapse now, as many thought it would in 2012, the monetary union is hardly out of the woods yet.
Australian dollar (AUD) to Hong Kong dollar (HDK): +5.239% change
The Aussie dollar’s been one of the biggest winners against the Hong Kong dollar in 2012, climbing from 7.76 at the outset of January to 8.17 this week. This has everything to do with the immense strength of Australia’s economy. For instance, while the UK, Eurozone and US might be grappling with recession, what’s Australia seeing? 4.0% annual growth. That’s sent investors flocking to the Aussie, giving you a big advantage if you need to transfer money to Hong Kong.
Guest author Peter Lavelle is an economic commentator at foreign exchange broker Pure FX. He graduated with a Master’s Degree in Modern Literature from the University of York in 2009, and has been repeatedly published. He currently lives in Madrid, where he’s learning Spanish.