Acting Financial Secretary welcomes reform to the renminbi exchange rate regime

In response to the announcement made by the People's Bank of China this evening, the Acting Financial Secretary, Mr Stephen Ip welcomed the latest reform to the renminbi exchange rate regime.

"Hong Kong's financial and monetary systems are well established and well prepared for changes of this kind," Mr Ip said. The recent refinements introduced to the Linked Exchange Rate system have strengthened its ability to deliver monetary stability in Hong Kong and to handle the impact of capital flows arising from changes to the renminbi exchange rate regime.

"The reform of the renminbi regime is also likely to benefit the economy of Hong Kong," Mr Ip said. These benefits include greater competitiveness in Hong Kong's exports to the Mainland and the stability brought by more sustainable economic development of the Mainland.

A stronger renminbi will also raise the purchasing power of Mainland consumers and this is likely to benefit Hong Kong's exports to the Mainland. Hong Kong's inbound tourism will also benefit as more Mainland visitors come and spend in Hong Kong.

"The Government has no intention at all to change the Linked Exchange Rate system which has served Hong Kong well for more than 21 years and has been the anchor of our economic stability," Mr Ip added.

21 July 2005