IT was business as usual at retailing, catering and other commercial establishments near the border between Shenzhen and Hong Kong yesterday even after the official buying rate for the Hong Kong dollar against the yuan in cash dipped below the psychological mark of one during the weekend.

The yuan rose to a new high against U.S. dollar yesterday afternoon, with the official rate at 7.8402 per dollar, the highest level since the current exchange system was set up in July 2005.

One hundred Hong Kong dollars could only buy 99.93 yuan at major banks yesterday afternoon, compared with 104.2 yuan early this year.

"Although the exchange rate breaks the psychological mark, the difference is small and thus unlikely to cause a great impact on local and Hong Kong consumers who travel across the border," said an analyst surnamed Wu with the Industrial and Commercial Bank of China (ICBC) during a telephone interview.

Owners of stores and newsstands next to the Luohu and Huanggang checkpoints said they had been rejecting payments made in Hong Kong dollars since last week.

A newsstand owner surnamed Chen said the declining Hong Kong dollars made it unprofitable for her to accept payment in that currency.

However, cashiers at the Hong Kong-invested chain restaurant Fairwood told the Shenzhen Daily that they would keep accepting Hong Kong dollars for the sake of customers' convenience.

Taxi drivers and major hotels in Luohu District said they were still accepting the currency as rejection may cost them business.

Retailers in the Luohu Business Center, one of the most popular shopping areas for Hong Kongers, are not concerned about the rising yuan.

"The exchange rate rises very slow and most mainland-made products are still 20 to 30 percent cheaper than those in Hong Kong," said a shop owner surnamed Xu at the center.

Shenzheners, on the other hand, will pay less while doing Christmas shopping in Hong Kong.

A financial adviser with the China Minsheng Bank suggested local holidaymakers pay their bills with credit cards in Hong Kong, to avoid losses accruing from a further depreciation of the Hong Kong dollar.

The exchange rate between the yuan and the Hong Kong dollar used to be 60 yuan to HK$100 in 1990, then 75 yuan in 1993, and finally 110 yuan in 1994 after the China Foreign Exchange Trade System (CFETS) came into operation in April 1994.

The Hong Kong dollar has been pegged to the U.S. dollar for more than 26 years. Since July 2005, the yuan has gained 5.1 percent in value against the U.S. dollar.

Editor: Donald