HONG KONG, November 6: Hong Kong leader Tung Chee-Hwa vowed again on Thursday to defend the local dollar but currency and interest rate jitters sent share prices tumbling.Tung's comments to reporters were prompted by a sharp rise in one-to-three-month interest rates over the past 24 hours - a signal to some that another attack on the dollar could be in the offing. ``I believe that we will succeed.in defending the (HK $-US $)link because our fundamentals are good and as soon as this has happened, interest rates will start to get back,'' he said. But the blue chip Hang Seng Index was unimpressed and sank in afternoon trading to 10,412 points, down 2.52 percent or 269 points, at the close.Tung and other officials have said they will defend at all costs the peg that has linked the Hong Kong dollar and the US dollar since 1983. That has meant suffering high interest rates, which have sent shock waves through the stock market and prompted analysts to lower forecasts for corporate earnings and Hong Kong growth.The benchmark three-month Hong Kong interbank offered rate rose to 12.67308 per cent at midday on Thursday compared with 10.85417 at the same time on Wednesday. ``Whenever there are interest rate concerns, people will be scared off,'' said Lennon Chan, executive director at Tai Fook Securities.Tung, a former shipping magnate, remained adamant and said interest rate rises would be short-lived. ``We are very determined to defend the linked exchange rate. We have abundant reserves,'' Tung said. ``Our economic foundation is very good. Our policy of defending the linked exchange rate will never change.''He was also drawn into an argument over whether his government was about to offer cut rate prices in its land sales to support a policy of increasing the housing supply. He said the government had no plans to sell land cheap.Sky-high property prices in Hong Kong, where cubbyholes could fetch up to US $ 1 million, have dipped by some 10 percent since August when Tung made known his plans to increase supply. Tung is caught between those among Hong Kong's population of 6.5 million who made small fortunes by investing in property and those who cannot afford anywhere to live.Robert Pope, head of the land office, slapped down reports on Thursday that the government was about to lower the cost of land to boost development.
