Weak greenback dulls HK's appeal as workplace of choice for foreigners

From top expatriate executives to Philippine maids, Hong Kong is no longer necessarily the first place foreigners choose to work as the weakness of the local dollar reduces their pay relative to their home currencies.

Under the exchange rate system, the Hong Kong dollar is pegged to the US dollar and thus drops with it, hitting expatriates hard if they are paid in local currency and need to send money home.

Jerry Chang, director of the international headhunting firm Baron & Co, said the weak Hong Kong dollar had made it harder for the city to recruit expatriates.

'It is a double blow,' he said. 'Under the linked system, Hong Kong cannot raise interest rates to control high inflation, while the local currency is falling with the US dollar against the euro, yen, pound, yuan and Australian and Canadian dollars,' Mr Chang said.

For expatriates paid in Hong Kong dollars, this means 'they are earning less when converting their money into their currencies at home, and at the same time they have to pay higher prices for food, accommodation and transport'.

As the local dollar is linked to the US dollar, Hong Kong's financial markets tend to keep local interest rates in line with US rates to avoid too much money flowing from one currency to the other, thereby upsetting the currency peg.