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Hong Kong and Denmark will keep currency pegs

Tuesday, January 27, 2015

Subject

The longevity and outlook for currency pegs.

Significance

The abandonment of the Swiss franc's three-year-old peg to the euro on January 15 put into question the longevity of pegged exchange rate arrangements. It also highlights how unusual such arrangements are today.

Impacts

  • The SNB will still have to continue to intervene in foreign-exchange markets to stabilise the Swiss franc.
  • The SNB move will not cause Danish authorities to stop pegging the Danish krone to the euro.
  • The near- and medium-term longevity of the Hong Kong dollar peg to the US dollar will not be questioned.
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