One yuan fetched HK$1.12 on the foreign currency market yesterday.
While China’s currency would need to fall 10.7 percent to reach actual parity with the Hong Kong dollar, the exchange rate offered by the city’s largest operator of convenience stores shows how depreciation pressures are making the yuan less attractive to hold.
“The recent sharp yuan depreciation has hurt local merchants’ willingness to accept yuan,” said Kevin Lai, chief economist for Asia excluding Japan at Daiwa Capital Markets in Hong Kong.
“The fact that they demand a bigger premium in the exchange rate to accept yuan payments shows the outlook is pretty negative for the Chinese currency.”
Trading the yuan at parity with the Hong Kong dollar by local retail chain may be a new norm to avoid foreign exchange risk amid a weakening Chinese currency, said Hang Seng Bank (0011) acting chief economist Thomas Shik Chun-sing, who expects the yuan to further soften 3-5 percent this year.
7-Eleven adjusted its yuan rate in light of recent drastic fluctuations in the currency and will change it whenever necessary, a company spokesman said in an e-mailed reply to questions.
The convenience store chain has more than 900 stores in Hong Kong and is part of Jardine Matheson Holdings’ Dairy Farm.
Signs in Circle K, another major convenience store chain, offer an exchange rate of 100 yuan per HK$105. Rates at cosmetic retail chain Sa Sa and Mannings, a personal health retailer under Dairy Farm, are both 100 yuan per HK$110.
The yuan plunged about 12 percent against the greenback last year.