HKMA flags potential for asset-price bubble from renminbi appreciation

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Rising liquidity may spark an asset-price bubble in Hong Kong once China begins to appreciate its currency, the Hong Kong Monetary Authority (HKMA) said on Tuesday.

In an article published in the HKMA's June Quarterly Bulletin, the institution acknowledged that the effects of a renminbi appreciation on import prices and aggregate demand were likely to be "modest". However the impact on liquidity conditions and asset prices could be "more significant".

Kelvin Fan, a researcher at the HKMA's econ

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