After re-pegging the Renminbi (RMB) from the US Dollar (USD) to a currency basket, the Hong Kong Dollar (HKD) is caught between the diverging Chinese and US economies. Disparity between the RMB and USD exchange rates and the HKD, and the disharmony of Chinese and US monetary policies towards Hong Kong have become increasingly acute. Hong Kong is at a crossroads. Should the HKD migrate from the dollar-zone to the renminbi-zone and realign with the national currency, and how? This paper analyses the mismatch and tries to answer the question.
