Hong Kong dollar could be on the move

William Ackman of Pershing Square Capital Management L.P., the luncheon speaker at CNBC and Institutional Investors delivering alpha conference held in New York today, is making a big bet on the Hong Kong dollar. The Hong Kong dollar is pegged to the U.S. dollar and is allowed to trade within a trading band. The Hong Kong Central Bank prints money to keep the Hong Kong dollar in a band. The Hong Kong economy is very strong and with 6% growth, 3% unemployment and the currency is way undervalued. They also have pegged interest rates near 0 just like in the United States.

Ackman believes the Hong Kong Central Bank will soon be revaluing the Hong Kong dollar 30% higher at some point in the future to stop the economy in Hong Kong from overheating and the real estate market from becoming a bubble.

As you can see from the 60-minute chart below, the market may already be reacting to Ackman’s prediction.

About the Author
Murray A. Ruggiero Jr.

Murray A. Ruggiero Jr. is the author of "Cybernetic Trading Strategies" (Wiley). E-mail him at ruggieroassoc@aol.com.

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