Mainland Chinese tourists were happy spenders in Hong Kong yesterday as the yuan strengthened past the local dollar for the first time in 13 years, boosting local business.
On a visit to the Convention Center, a popular harborfront sightseeing spot, Zhang Weili was able to pay to have the obligatory photograph taken in yuan, instead of the local Hong Kong dollar, with no problems.
"Before we came here, my wife said to me that we should be changing [yuan] for some Hong Kong money," said Zhang, who came from neighboring Guangdong Province.
"But I said -- there's no need now. Most shops will happily take our money because it has got stronger," he said.
firm
As of yesterday, the yuan was trading on the firm side of 7.800 to the US dollar, the level at which the Hong Kong dollar has been pegged since 1983 when Britain sought to bolster local confidence during talks with Beijing on the return of the colony to Chinese rule in 1997.
The yuan was itself pegged to the US dollar until 2005 when Beijing decided to revalue it by 2.1 percent and place the unit in a currency basket, allowing a greater but still very tightly controlled margin of flexibility.
The yuan has since slowly but steadily risen in value on the back of China's booming economy and the breaching of the 7.80 level inevitably sparked concerns the US dollar peg could be dropped in favor of the mainland unit.
Hong Kong officials over the years have insisted that the US dollar peg would not be dropped and have repeated that line while most analysts agree that there is nothing to be gained from such a change.
At the same time, they have downplayed any threat that the rise in the yuan could stoke local inflation pressures since Hong Kong imports so much of its basic needs from mainland China.
better
Meanwhile, Hong Kong people, long used to hopping across the border into China for cheap goods and services, are finding that their mainland compatriots may be now getting the better deal.
"We can't deny that mainland tourists will find that things have suddenly got cheaper and they can afford to spend more," said Vincent Kwan, chief economist for Hang Seng Bank.
The photographer who took the picture for Zhang, said his customers, most of them from the mainland, appeared to be more willing to spend.
"I haven't seen a major impact on my business yet but the mainland tourists tend to be more willing to spend their money," said the photographer who asked not to be named.
Wong Ka-ngai, union secretary of the Hong Kong Tour Guides General Union and a local tour guide for Chinese tourists, said the stronger Chinese currency has had more of a psychological impact so far on visitors from the mainland.
"The difference between the two currencies isn't that much but this definitely makes it more convenient for the Chinese tourists," Wong said.
Yang Mingxing, a frequent visitor to the southern Chinese territory, agreed.
"Many people may feel that things in Hong Kong are cheaper and shop more, but in reality, it's more or less the same. I think it has more of a psychological impact than material," Yang said.
"If the yuan rises more, I'll see more benefits but for now, I'm not rushing to spend all my money here," he added.
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