The Hong Kong dollar remained stable after the launch of measures to reform the yuan exchange- rate regime, Hong Kong Monetary Authority Chief Executive Joseph Yam said Friday.

The People's Bank of China announced Thursday that RMB, or yuan, would no longer peg to the US dollar from July 21, and, instead, it would float within a band based on market supply and demand with reference to a basket of currencies.

Speaking to the media Friday, Yam noted the Hong Kong dollar's performance has remained stable in both London and New York markets, and he expected the stability will continue.

He said refinements to the operation of Hong Kong's Linked Exchange Rate System had shown the Hong Kong government's determination to maintain monetary stability. The introduction of the Convertibility Undertaking on the strong-side has also lowered expectations on the yuan's impact on the Hong Kong dollar.

The central bank of China has revalued the yuan by 2.1 percent to 8.11 against the US dollar, allowing a more flexible movement within 0.03 percent a day.

The reform on yuan's exchange rate regime did not create much disturbance in local currency market because the change had long been anticipated and would not lead to an overhaul of the Hong Kong dollar's link with the US dollar. Some financial analysts expected the reform's impact on market would be more psychological than material.

Yam assured Thursday that Hong Kong dollar's link to the US dollar would not be dropped, despite the end of yuan's peg to dollar.

Source: Xinhua