HKD – Hong Kong Dollar
As the name would perhaps suggest, the Hong Kong Dollar is the unit of currency used exclusively within the region of Hong Kong and not only does this currency draw inspiration from its American counterpart as to its name, but also the value of the banknotes as well which range from 1 to 1,000 in value.
Hong Kong was finally granted the legal status of a free trading port in the mid 19th century and, given its convenient and strategic proximity to both Japan and China (two nations which were extremely rich and tempting for the European traders) meant that it enjoyed a brisk and lucrative trade with the passing merchant class.
Although at this time Hong Kong was currently under the direct control of Britain as a colony, the British attempts to introduce a single currency across the whole of their colonies had proven to be much more difficult to put into practise than perhaps what was originally planned for. One of the major hurdles that diluted the British desire to ensure that their own currency (at this time, the unit of currency within the British Empire colonies was the sterling silver coinage) was the fact that there were several foreign currencies all circulating in the Hong Kong colony.
Although Chinese coins and Indian rupees were a common sight within Hong Kong not to mention a common method of settling business transactions, it was the Spanish dollars that truly ruled the roost and so the British eventually conceded defeat when they realised they were entering into direct competition with an already well founded, popular and common currency model.
In 1863, the Royal Mint then decided that they would establish an outpost facility in the very heart of the colony so as to provide Hong Kong with coinage that would most closely resemble the Spanish dollar that proven to be so resilient.
In essence then, the very question and identity of the Hong Kong Dollar and currency has always proven to be an extremely contentious and sensitive subject within the jurisdiction and this was evidenced by virtue of the fact that coinage that had Queen Elizabeth the 2nd on them were withdrawn from circulation.
Furthermore, when the time came for a new design for Hong Kong Dollar, the government did not subcontract or delegate the process to an artist but rather, merely gave responsibility of the process to the Hong Kong Monetary Authority. The head of the Hong Kong Monetary Authority at that time, Joseph Yam was under a significant amount of pressure and scrutiny to ensure that he choose as politically bland a design as possible.
During 1974-1983 the Hong Kong Dollar was no longer pegged and instead, became free floating instead meaning that its value would be entirely influenced and contingent upon global supply and demand. Coincidentally, this was the era when the Hong Kong Dollar performed at its worst in comparison to the US dollar, when in November of 1983 saw the exchange rate of US$1:HK$9.600.
This came as not only a tremendous surprise to economists but also a major shock and the reason for this was due to the fact that when the Hong Kong Dollar currency system was first converted to the free floating system, it enjoyed an initially strong position. Therefore, 1974 was the year in which the exchange rate between US Dollars and Hong Kong Dollars was set at US$1:HK$4.965.
Currently, the long term future of the Hong King Dollar as the recognised and official currency of Hong Kong seems fairly bleak and uncertain and there have been prominent economic figures demanding that the Chinese currency be adopted instead.
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