The rising yuan changing shopping, saving habits in HK
Staff Reporter 2012-10-21 16:57
A foreign exchange shop in Hong Kong. Chinese may be looking for cheaper consumer goods now that the HK dollar is weakening against the yuan. (File photo/CFP)
As the Hong Kong dollar continues to decline, an increasing number of Chinese people are showing strong interest in shopping for consumer goods in the city, while their counterparts in the special administrative region are also becoming more willing to hold their savings in renminbi.
The Hong Kong dollar has been depreciating along with the US dollar. The exchange rate published by China Construction Bank, Bank of China and ICBC showed the Hong Kong dollar has weakened to as low as 0.7983 Chinese yuan on Oct 16, according to Guangzhou-based Southern Metropolis Daily.
The renminbi is expected to appreciate by 1% to 2% in the next two quarters and its recent rapid appreciation may cause the Hong Kong dollar to drop even further to a HK$0.8 per Chinese yuan by the end of this month, said Guan Zhuozhao, a Hong Kong economist. As long as the yuan continues to appreciate against the US dollar, more Chinese will want to shop in Hong Kong, he predicted, according to our Chinese-language sister newspaper Commercial Times.
Hong Kong tourists, on the other hand, may lose interest in shopping in China due to the depreciating Hong Kong dollar. They may opt for opening renminbi accounts in China since the Chinese currency is expected to rise continuously and the saving interest rates in Chinese banks are higher than their Hong Kong counterparts.
Chinese and Hong Kong banks around the Lo Wu Control Point between Shenzhen City and Hong Kong said the amount of renminbi Hong Kong people saved at their banks this year has increased by 15% to 20% and that assets they converted into renminbi also surged by 20%. Many people in Hong Kong said they have begun to change their assets in order to avoid the weakening Hong Kong dollars negative effect, according to the Commercial Times.
The depreciation also changed the shopping habits of Chinese consumers, who used to target luxury goods in Hong Kong. They may turn their attentions to consumer goods as they are sold at much cheaper prices than in China, according to Dr. Thomas Chan, the head of the China Business Center of the Hong Kong Polytechnic University.
