Weaker Hong Kong dollar to boost tourism and lower cost of services: economists Recent weakness in the Hong Kong dollar against some regional currencies has made the city more appealing to inbound tourists while lowering the costs of services, economists and industry leaders have said. The Hong Kong dollar is pegged in a narrow range to the US dollar, which has weakened significantly in recent months. The US dollar index, or DXY, a measure of the currency against a basket of six others, dropped by 4 per cent in the first quarter. The local currency has appreciated strongly against the US dollar in the past four days, prompting the Hong Kong Monetary Authority, the city’s de facto central bank, to intervene several times since Saturday to keep it within the range. “A weaker Hong Kong dollar will help to boost tourism and bring more economic benefits to the city than anything else,” Billy Mak Sui-choi, associate professor at Baptist University’s department of accountancy, economics and finance, said on Tuesday. He said the local currency peg to the weaker US dollar would lead to the Hong Kong dollar’s depreciation against other currencies, resulting in cheaper prices for exports from the city and local professional services. “This will help boost tourism, creating a stronger incentive for tourists to come to Hong Kong and global investors to seek our professional services such as accounting and legal services,” he added. Mak noted that the inflow of overseas capital would stimulate more economic activity in Hong Kong as banks would have a tendency to reduce interest rates driven by greater liquidity flows. The Monetary Authority had spent HK$129.4 billion in total to buy US$16.7 billion worth of US dollars in interventions to weaken the local currency, which in recent days had hit the strong end of its trading band. Hong Kong’s currency peg with the US dollar has been in place since 1983. Since 2005, the authority has been intervening to keep the exchange rate within a trading band of HK$7.75 to HK$7.85 per US dollar. Mak said that the strengthening of the Hong Kong dollar against the US currency was driven by the inflow of overseas capital in search of bargains in the city’s stock market. It was also caused by a weakening US dollar, dogged by the trade war and a sluggish economic outlook. The Hong Kong dollar has weakened by 10 per cent against the Japanese currency since the beginning of the year, to HK$5.42 per 100 yen on Tuesday from HK$4.90. The euro has also appreciated by 10 per cent to HK$8.77 during the same period. Gary Ng Cheuk-yan, a senior economist at Natixis Corporate and Investment Bank, cautioned that significant price increases in Hong Kong over recent years might have diminished the impact of this currency depreciation. He suggested that the current level of depreciation might not be substantial enough to make Hong Kong’s luxury goods notably more price-competitive compared with regional rivals, particularly Japan and Korea. “It will take another 10 per cent to have any meaningful impact,” he said. Michael Leung Chun-wah, chairman of the Association for Hong Kong Catering Services Management, said local restaurants’ net profits had improved in past years as prices for imported goods from mainland China had reduced by 10 per cent due to the depreciation of the yuan against the Hong Kong dollar. “About 70 per cent of restaurant imports are from the mainland such as chickens, geese and ducks so their operating cost had dropped overall to the point that had improved their net profits, but imported food from other regions such as Brazil has yet to reflect the price change,” he said. “This serves as a comfort for the industry as restaurants are still suffering from an outflow of customers who flock north to spend.” https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3309302/weaker-hong-kong-dollar-boost-tourism-and-lower-import-costs-economists-say (ICE HONG KONG)

Fonte notizia: South China Morning Post