Weaker yuan boon for Hong Kong shoppers, but bane for city's retail, analysts say
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The People's Bank of China allowed the yuan to further weaken against the US dollar, which was expected to boost the competitiveness of exports.
China's central bank set its daily fixing rate – also known as the midpoint rate – at
7.2092 on Friday, a new 19-month low and falling below the psychologically significant 7.2 threshold for the first time since September 2023.
Some economists said the Hong Kong dollar would strengthen against the yuan as a result of its peg with the US dollar.
'Our expectation is that the Chinese government is likely to roll out additional consumption stimulus, which could cover the service sector and pose further risks to Hong Kong's retail and dining scene,' said Chim Lee, a senior Asia analyst with the Economist Intelligence Unit.
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He said the yuan was facing significant depreciation pressure and predicted that it could test 7.5 per US dollar for the rest of this year, which would be the weakest since 2007.
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