The strong Hong Kong dollar is weighing on retail sales in the city despite better-than-expected first-quarter growth, Financial Secretary Paul Chan Mo-po says.
Chan wrote in his blog that the strengthening of the local dollar against the yuan and other currencies had hurt the spending power of tourists in the city.
He said the stronger currency, along with changed spending patterns among tourists and the wave of northbound local travelers, were posing real challenges to Hong Kong's retailers and food and beverage businesses.
The Hong Kong dollar rose as high as 20.21 Japanese yen two weeks ago and has also remained above the 0.9 yuan mark in the past month.
Hong Kong's retail sales dipped 7 percent year-on-year in March, after a combined 1.4 percent rise in January and February.
Sales of jewelry, watches and clocks, and valuable gifts decreased by 17.7 percent in value, as mainland tourists shifted their focus to local experiences from luxury spending.
The Hong Kong Retail Management Association expects sales in April will see a high single or even low double-digit decline despite the long Easter break, because of adverse weather and fewer mainland tourists.
Chan also warned that the longer-than-expected high interest rate environment would impact Hong Kong's exports, investment sentiment and asset market performance as well as the global economic recovery.
Tourists get less bang for their buck at currency exchanges. Sing Tao
