Foreign Exchange News
- Guangdong News
Date: 29-Nov-2006 Sources: (Xinhua Online)
The Hong Kong dollar is losing its popularity in Shenzhen, an economic center bordering Hong Kongin Guangdong Province, due to the appreciation of the Renminbi (RMB).
As the value of the RMB keeps rising, more Shenzhen people are exchanging their HK dollars for the RMB and some stores are no longer accepting the HK currency, the Guangzhou-based Yangcheng Evening News reported.
Shenzhen is the trading hub of the RMB and HK dollar, with millions of tourists and business people commuting between Hong Kong and the Chinese mainland through two main customs points of Lok Fu and Huanggang.
The HK dollar once so dominated its economy that local residents earned their salaries in HK dollars, which were acceptedby many stores and even taxis.
Local analysts attribute the popularity of the RMB to its appreciation as well as the growing enthusiasm of Hong Kong businesses to invest in the mainland with the mainland currency.
The value of the RMB against the U.S. dollar hit a new high on Monday, with the central parity rate at 7.8402 yuan to one dollar. As the value of HK dollar is pegged to the U.S. dollar, 100 yuan can now buy 101 HK dollars, making the yuan more valuable.
Guo Shipin, economic consultant of the Shenzhen municipal government and dean of the finance department of Shenzhen University, said more Hong Kong people were investing in the mainland real estate industry and other financial sectors, with the anticipation of a further RMB appreciation.
According to statistics from the Shenzhen Customs, the amount of the RMB exported to Hong Kong decreased by 90 percent in the first half, in comparison with the same period of last year. And the amount of the RMB siphoned back to the mainland was 460 million yuan more than the amount of the RMB exported to HK in the first half of this year.
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