No thank you to Hong Kong dollars!

Having spent the last three years or so in the Shenzhen Special Economic Zone (across the border from Hong Kong), I became accustomed to using Hong Kong dollars (HK$) occasionally for anything from taxi fares to meals. In the near past, the HK$ seemed to have a bit of a cachet in Shenzhen.

However, in the last four months or so, with the rapid appreciation of the Chinese yuan (or renmibi, RMB), the HK$ has fallen out of favor -- and fallen hard. The RMB was pegged at about 8.2 / US$1 , but now is on par with the HK$ at about 7.8 / US$1. I think consumers realize instinctively that the RMB will appreciate further as well.

As a result, Chinese in Shenzhen now eschew the HK$. You almost can't give the stuff away! Case in point, a recent taxi fare came to RMB 20.6. I gave the driver a RMB 20 note and a HK$2 coin. All I had. The driver refused the coin although that would have been a rather robust tip by Mainland Chinese standards (tipping of any sort is not done in China). He said "I can't give this away."