Effect of depreciation of Hong Kong dollars? URGENT 20mrk

The economic effects of the exchange rate depreciation of HK dollars include:

1) INFLATION
A fall in the exchange rate makes imported goods and services more expensive in the HK. Producers may then pass on higher costs of imported components and raw materials onto consumers. This causes extra [cost-push] inflation. Wages may rise in response to this triggering off the possibility of a wage-price spiral.

2) EXPORTS AND THE BALANCE OF PAYMENTS
Exporters should benefit from a lower HKD. A depreciation makes HK goods cheaper priced in a foreign currency.

Demand for exports will grow faster if the demand for HK goods overseas is elastic

3)IMPORTS
The demand for imports should fall as imports become more expensive.

4) WAGE DEMANDS
Partly due to higher inflation and falling real incomes, wages may rise.

5) ECONOMIC GROWTH (GDP)
Higher exports (an injection into the circular flow) and falling imports leads to rising GDP levels.
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簡而言之, 港元外滙兌換率下降的可能影響包括:
i) 通貨膨脹上升
ii) 出口增加
iii) 入口下降
iv) 工資上升
v) 國民生產值增加 (GDP)

2008-05-08 02:59:13 補充：
>>>How can the hk gov do to stop the depreciation

No one can stop the depreciation or appreciation of HKD currency as the exchange rates have been pegged to USD since 1984. HKD can only fluctuate with USD.

由於聯繫滙率關係, 港元與美元掛勾, 緊隨美元滙率升降, 而香港政府當然無力影響美元上落, 除非與美元拆勾。

The main bad effect from depreciating HKD is IMPORTED INFLATION. This is because HK people use HKD to buy Chinese foods and import crude oil overseas. If CNY keeps appreciating, the imported Chinese foods would become more and more expensive for example: pork, beef and canned foods. Furthermore, the crude oil prices raised and the drivers' cost would become higher. However, foreign people (Chinese, European people) would buy HK assets as HKD keeps on depreciating and their currencies (CNY, EUR) keep on rising, HKD assets would become cheaper. This would further boost the prices of HK assets such as properties and stocks, inflationary pressure in HK would be intensified.

Depreciation of Hong Kong Dollar? Do you mean inflation or deflation?