Forbes – At a lunchtime keynote at Wednesday’s CNBC Institutional Investor Delivering Alpha conference, the founder of Pershing Square Capital detailed a trade on the Hong Kong dollar, which has been pegged to the dollar for decades and depreciating right alongside the greenback even in the face of rising inflation, a widening wealth gap and spiking real estate prices.
Despite those issues, Hong Kong is stuck with the same zero interest rate policy the Federal Reserve has signaled it will maintain until mid-2013 due to its dollar peg. Experts have suggested that Hong Kong would be better served by pegging its dollar to a trade-weighted basket or the China’s yuan, which has been appreciating against the dollar over the past few years while its Hong Kong equivalent has not budged.
