China’s yuan sees its biggest weekly loss against the U.S. dollar in more than three years this month, affecting the perception of entrepreneurs in Hong Kong.
Twenty-six year old Yuki Ng started her jewelry business nine months ago. She accepted transactions in Malaysian ringgit, Hong Kong dollar and the Chinese RMB.
The recent weakening trend of the RMB though is forcing Yuki to think twice about accepting payments in the Chinese currency.
“If they need to pay RMB, I will accept. But I prefer Hong Kong dollar because the exchange rate is up and down, up and down. Different time, different exchange, and maybe we will lose money,” said Yuki, owner of Ainy Wedding Shop.
RMB is accepted by many businesses in Mongkok in Lowloon West in Hong Kong. However, after the Lunar New Year, the People’s Bank of China has been fixing the yuan weaker and weaker. That caused a sharp unwind in everybody’s positions in both onshore and offshore markets, surprising traders and analysts altogether.
While the sudden depreciation of the RMB last week is one of the largest three-day move in recent years, most economists are still sticking with their forecasts for a steady appreciation of the currency this year.
Louis Kuijs is Chief Economist for Greater China at Royal Bank of Scotland (RBS).
“We remain very comfortable with our call on the medium term path simply looking at the structural forces on the FX market, where we still see a large structural surplus from the trade account, from the net position on foreign direct investment. So that makes us very comfortable about our path. When will it break through six. Well, I don’t know exactly when, but definitely this year,” said Louis Kuijs.
As for Yuki Ng, even though preferring Hong Kong dollar, she plans to continue accepting Chinese RMB, as she has a good number of clients from the Mainland.
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