A currency's appreciation or depreciation ... a floating currency, so the market dictates its value. The value of the Hong Kong dollar, on the other hand, is pegged at a fixed exchange rate ...

When the value of the currency declines, authorities worry about both imported inflation and the balance sheet effects of an exchange rate depreciation on borrowers ... to go to the soft end of free ...

There is, however, an unresolved issue about whether monetary policy in a floating rate system should be used in the short run to try to affect the exchange rate ... band was widened as pressure grew ...