TUMBLING European currencies, which effectively increase the cost of foreign goods in the territory, will have only a mild impact on Hong Kong's external trade, economists say.
But the cut in competitiveness, coupled with weak economies in the European Community, will reduce Hong Kong's exports to Europe generally - with the possible exception of the UK, which came out of the Exchange Rate Mechanism last September.
In the first five months of the year, 16 per cent of Hong Kong's domestic exports went to Europe and 14.6 per cent of re-exports worth $308.75 billion.
Nomura Research Institute economist Daryl Ho Hon-kit said that compared with the deutschemark's weakest value last year - about 1.60 to the US dollar - yesterday's rate of about 1.74 marks gave a depreciation of about eight per cent.
Germany is the main European market for Hong Kong traders.
He said: ''In the second half of 1993 I wouldn't expect to observe a significant effect in domestic shipments to European countries, especially because a depreciation of eight per cent is not very strong.