China's yuan policy holds out hope for HK retailers

Hong Kong

HONG Kong's embattled retailers are finally getting a break.

After mainland tourist arrivals plunged last year as policymakers devalued the yuan, foreign-exchange moves may now encourage shoppers back to the city by making alternatives such as Japan and Malaysia costlier.

China's central bank has this year kept the yuan closely linked to the US currency (and therefore the greenback-pegged HK dollar) while allowing it to drop 11 per cent against the yen and 7.4 per cent versus the ringgit.

"It will help perhaps put a floor in terms of retail sales," said Sandy Mehta, chief executive officer of Hong Kong-based advisory firm Value Investment Principals Ltd. The US dollar's slump this year will bring some respite to retailers, "but further weakness will be needed to have more of an impact and turn the tide".…