ISSN : 2047-2528

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THE WORLD FIRST RENMINBI OFF-SHORE FINANCIAL CENTRE HONG KONG, CHINA: The Effect and Impact of RENMINBI to the Hong Kong Economy
 
Ping-fu LAI  and Otto Wing-hung LAU
 
 
Since the handover on 1 July, 1997, Hong Kong reunified with China and commenced its new era as one of the Special Administrative Regions in China. Yet, after 1997, Hong Kong Dollar (HKD) still maintained the fixed exchange rate system with its peg to the US Dollar (USD), which has been undergoing depreciation in the recent years. The currency regime together with the rising tide of (Renminbi) RMB exchange rate would certainly give in some extent an impact on Hong Kong’s economy and in the role as a financial centre both in the near future. In the analytical part, a few variables were selected in the equation for ANOVA by multiple regression model, based on the outcome of the literature review and review of variables including RMB deposit rate, RMB deposit in Hong Kong, HKD deposit rate, Hang Seng index, Hong Kong inflation rate and RMB exchange rate. In term of differences between the lagged scenario of one quarter year in taking into consideration of any lagging effect on the economy, the findings show very little difference although it is noted from comparing the p-values from the lagged cases would be the significant. That is, the RMB exchange rate has direct impact with the economy of Hong Kong represented by the Hong Kong GDP growth.

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