The Hong Kong dollar has remained stable after UK’s decision to leave the European Union, said Norman Chan Tak-lam, chief executive of the Hong Kong Monetary Authority, on Friday. However, he added that he expects the UK’s talks with the EU over its exit to be complicated and unpredictable, meaning that there may be continued fluctuation in the markets in the near future.

Norman Chan
Norman Chan.

“Hong Kong, the Hong Kong dollar exchange and and market has been stable and the Renminbi offshore market operations were also normal, there were no sharp fluctuations,” said Chan.

He said that as investors sought to buy the Japanese yen and the US dollar on Friday, the Hong Kong dollar remained stable as it was pegged to the US dollar.

See also: HK stocks and UK pound dive, Asia markets collapse as UK votes for Brexit

Regarding the short-term future, Chan said that “Hong Kong’s banking system has high liquidity, our financial system is very sound. It has the ability to withstand fluctuations that may happen in the market.”

Financial Secretary John Tsang, currently in Beijing, also told Hong Kong reporters that the Hong Kong government has the confidence and experience, as well as the ability, to withstand fluctuations in the global market.

brexit hong kong
Photo: StandNews/HKFP.

The EU referendum will not have a significant, direct effect on Hong Kong as Britain’s trade volume with the SAR is only 1.5 per cent of Hong Kong’s total, he said. However, Tsang also said that the 600 British enterprises in Hong Kong will face an indirect consequences due to the UK’s exit.

Lawmaker Christopher Cheung Wah-fung, representing the Financial Services constituency, said that the stock markets were relatively calm even though the Hang Seng Index fell by about 1,000 points. He said that he did not see a domino effect and said that UK’s decision to leave the EU could mean that capital will flow into Hong Kong. This will be beneficial to the city, he said.

Chantal Yuen is a Hong Kong journalist interested in issues dealing with religion and immigration. She majored in German and minored in Middle Eastern studies at Princeton University.