Hong Kong has no plans to drop its currency peg with the U.S. dollar and the peg is not a significant contributor to rising inflation, Financial Secretary John Tsang said on Sunday.

Tsang said the Hong Kong dollar peg, introduced in 1984, had maintained currency stability in the territory. Inflation, now above 6 percent, was largely due to spiralling food prices, he said in remarks during a visit to Australia reported on the Hong Kong government’s website on Monday (www.news.gov.hk/en).

“One of the best ways to ease worldwide inflation is for large food producing economies to maximise their production capacity,” Tsang said. “With an abundance of food supplies, prices would go down.”

Prices of meat in Hong Kong, much of it imported from mainland China, have surged more than 50 percent in the past year amid tight supply. Import prices in Hong Kong are being boosted by the Hong Kong dollar’s link to a weak U.S. dollar, although Tsang said that was not having a significant impact on inflation.

Source: http://www.afxnews.com

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