Paid Members Public The East Asia Economist The 1997 double play isn't yet at work, and the HKD doesn't look as over-valued as then. But Hong Kong does now face a double whammy of Fed tightening and zero covid. With maintenance of the peg ultimately being a political decision, the question is how much economic pain the authorities can take. Paid Members Public cycle Japan – warm, not hot Japan's economy is warm, not hot. That will change if the positive consequences of JPY weakness (corporate competitiveness) start to outweigh the negative (lower real incomes). At that point, some of the nonlinear upwards pressures on prices identified by the BOJ will start to become important.