A busy street in Hong Kong. (File photo/Xinhua)
The continuous drop of the Hong Kong dollar against the renminbi has dealt a major blow to the livelihood of many people from the mainland who work in the city, many of whom are considering returning to the mainland for works.
Ms Zhou is a typical example. After graduating from a mainland Chinese university, she went to Hong Kong for graduate school. Afterwards, she chose to work in Hong Kong, although her husband stayed in their hometown to work in the public sector.
This year Zhou plans to return to her hometown to work for the sake of bringing the family back together. Another major reason is the sharp drop in the Hong Kong dollar against the renminbi, which greatly lowers the value of her wage after it is converted into the Chinese currency.
Zhou remembers that in the late 1990s, 100 Hong Kong dollars could be converted to 106 yuan (US$17 at current exchange rate) but the Hong Kong dollar began to depreciate against renminbi when she was studying at graduate school. In late 2006, the exchange rate gradually approached 1:1 and in early 2007, the renminbi became more valuable than the Hong Kong dollar for the first time in 13 years. As of October this year, the Hong Kong dollar is worth only 80% of the renminbi.
Many of Zhou's classmates ask her where to shop in Hong Kong. Travelers from Guangdong to Hong Kong and Macau will shoot up 30% this year.
In November 1971, Hong Kong began to embrace a free floating exchange rate forits currency. However, in 1983, the Chinese and British government started talks on the territory's future, prompting the exchange rate to plunge to US$1=HK$11. In October 1983, Hong Kong began to peg the exchange rate at US$1=HK$7.8, which has lasted until now. Therefore, whenever the US dollar depreciates against the renminbi, the Hong Kong dollar will also go down against renminbi accordingly.
Since Oct. 11 this year, the renminbi has appreciated against the US dollar continuously, leading to the devaluation of Hong Kong dollar. At present, HK$100 can be exchanged for around 80 yuan.