Updated at 7.45pm: The Federation of Hong Kong Industries has welcomed the mainland government?s decision to revalue the yuan, saying it would help remove uncertainty in export markets. Last week, the government announced that it would implement a 2.1 per cent appreciation of the yuan to the US dollar. It will also no longer peg its currency to the greenback. Instead, the yuan will be weighted against a basket of foreign currencies. Federation director-general Robin Chiu said the revaluation might raise production costs at Hong Kong-owned factories in the mainland but in the long run it would prove beneficial. ?Although Hong Kong companies which have factories in the mainland may suffer ... pressure on profit margins, their worries about a shift in regime will be swept away, and thus it will be easier for them to quote product prices that embrace currency risk,? he said. Another potential benefit to Hong Kong would be the ability of mainland visitors to spend more in the territory. ?Today, mainlanders have become the largest source of visitors to Hong Kong, and the yuan revaluation will strengthen their purchasing power,? said Mr Chiu. ?With the grand opening of Hong Kong Disneyland in September this year, we expect more and more mainlanders to be attracted to Hong Kong.? Internationally, the revaluation would also alleviate concerns by the US and the European Community about ?worsening trade deficits?, Mr Chiu said. He noted that the US had already threatened to impose punitive trade tariffs on imported goods from China. ?The mainland and the US began their talks over a bilateral trade imbalance, and ahead of their meeting the US already placed quantity restrictions on certain ?made-in-China? textile products. ?Lifting the yuan value can counter the US?s allegations that its trade protective measures can restore the trade balance, and hopefully this will help discard the Hong Kong business community?s uncertainty about export outlooks,? Mr Chiu added. The federation also anticipates other Asian currencies will follow China and revalue. If this happens Hong Kong, with its currency pegged to the US dollar, will ?enjoy higher export competitiveness? than other Asian countries. Meanwhile, theFinancial Times reported on Monday that the US was told in advance of the revaluation. Washington had long been urging China to adopt a more flexible currency regime. The US had hoped for a higher revaluation but the central government was worried that too high a revaluation would make Chinese exports uncompetitive and increase unemployment in the mainland. In theory, the revaluation of yuan will make exports from China dearer and less competitive. Foreign producers will benefit as their goods will become more competitive. But the revaluation could also have some negative impacts on China?s economy. Asian Development Bank economist Cyn-Young Park told a recent business briefing that a yuan revaluation could hurt the mainland. Mr Park explained that dearer exports might lead to a deterioration of China?s current account balance. This would reduce global demand and lead to excess domestic capacity. Ultimately, this could have a downward effect on prices and inflation, he said.