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Banks face reality - yuan is stronger than the HK dollar

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Your bank is not making a mistake when the teller gives you less than 100 yuan for HK$100 - the value of the yuan has surpassed that of the Hong Kong dollar in Hong Kong.

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In the mainland foreign exchange market, the yuan has still not reached parity, but it is getting very close. The exchange rate yesterday was HK$1 to 1.00202 yuan in late afternoon trade, while the yuan closed at 7.809 to the US dollar.

Foreign exchange dealers expect the yuan to continue climbing and level with the Hong Kong dollar soon.

'It could happen within one to two weeks,' said Philip Lau Cheuk-hang, Citic Ka Wah Bank's executive vice-president and treasurer.

However, most Hong Kong lenders, including HSBC, Hang Seng Bank and some city branches of mainland banks, such as Bank of China (Hong Kong) and China Construction Bank (Asia), are already asking customers to pay more than HK$100 for every 100 yuan.

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On yesterday's board rates, customers could get around 99.7 yuan for HK$100 from HSBC compared with 100.06 yuan on December 28, while BOCHK was offering customers 99.70 yuan for every HK$100.

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