Diagram 2.3： Exchange rate movements in 2026 will continue to hinge on the policy path of major central banks and relative growth performance across major economies

amid interest rate cuts by the Us Fed in the later part of the year. Under the Linked Exchange Rate System, the Hong Kong dollar also depreciated along the US dollar against other currencies of our major trading partners. The nominal trade-weighted effective exchange rate index fell by 3.2% in December 2025 over continued US dollar softness in 2026, the direction of exchange rate movements will continue to hinge on the monetary policy decisions of major central banks, relative economic growth performances of major economies, and geopolitical