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Hong Kong's dollar peg hits crossroads amid currency slide

City's growing relationship with China weakens link with greenback

As Hong Kong's economy has grown closer to mainland China's, maintaining its currency peg with the U.S. has become more difficult.   © Reuters

HONG KONG -- The Hong Kong dollar's sharp fall reveals how the currency's peg to the U.S. dollar is colliding with the territory's deepening integration with the Chinese mainland economy.  

In London, the Hong Kong dollar traded for 7.85 against the greenback at one point Thursday, its weakest level in roughly 35 years. Hong Kong started pegging its currency to the dollar in 1983, and in 2005 introduced the trading band allowing the currency to move between 7.75 and 7.85.

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