Jan. 12, 2007 (China Knowledge) - The value of the RMB has officially overtaken the Hong Kong dollar yesterday for the first time in 13 years, prompting debate over whether Hong Kong should stop pegging its currency to the U.S. dollar.

China's central bank set the RMB’s mid-point against the U.S. dollar on Thursday at 7.7977, pushing the currency for the first time since 1994 above 7.8, the level at which Hong Kong has pegged its currency to the U.S. dollar.

It is believed the rise of the RMB was related to Beijing’s announcement of a record high trade surplus – China’s full-year trade surplus jumped 74% last year to US$177.47 billion, adding pressure on the central government to revalue the currency.

Despite the psychological significance of the RMB overtaking the Hong Kong dollar, analysts said that they do not expect any pressure on Hong Kong Monetary Authority to peg the Hong Kong dollar to the RMB for now. Still, market watchers have suggested Hong Kong will eventually repeg its dollar to the RMB due to the growing integration between the two economies.