Weaker Hong Kong dollar to boost tourism and lower cost of services: economists
Professor Billy Mak says weaker currency will incentivise tourists to visit and global investors to seek city’s professional services
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.