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Strength of currency causes territory exporters to worry

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A strong Hong Kong dollar will hit exports as consumers in major trading markets switch to substitutes from low-cost countries, a report by the Hang Seng Bank concludes.

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The steep climb of the US dollar - to which the Hong Kong dollar is pegged - will ease local inflationary pressure by cutting the cost of imports.

During the past 22 months the US dollar has surged from post-war lows against major currencies such as the yen and deutschemark to record highs.

Measured against a nominal effective exchange rate index, the greenback has appreciated 20 per cent.

The rise is more pronounced against the yen, where it has surged from 80.6 to 124 - a rise of 53 per cent.

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This has led to a corresponding appreciation of the Hong Kong dollar.

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