Hong Kong has fallen one place to become the fifth most expensive place for expatriates to live, while Tokyo remains the most expensive city in the world, according to a cost of living survey for foreign workers.

The survey said the weak American dollar and strong European and Asian currencies helped Tokyo stay in the top spot, while London has moved up five places to take second.

"There have been some dramatic movements in the rankings this year which are largely due to currency fluctuations, particularly of the US dollar and the euro," explained Marie-Laurence Sepede, senior researcher at Mercer.

While European and Asian capitals have risen in the ranks, Chinese cities have generally fallen this year, as the Chinese currency is pegged to the US dollar and is affected by its depreciation.

American cities have dropped out of the top ten, with the most expensive city New York ranked at 12.

Sepede said findings indicate European cities will continue to move up in the ranks as the euro gains momentum, while new members of the EU are likely to become more expensive.

"The euro has appreciated 11 per cent in the past six months, contributing to the rise of European cities," she said.

"Looking ahead, we are likely to see cities in the new EU accession countries rise in the rankings, as more investment is made in commercial development and standards of living increase," Sepede said.

Sepede said expatriates should also watch out for Australia and New Zealand. "Living costs in Australia and New Zealand have risen faster than anywhere else globally, mainly due to the strength of the currencies in these countries," she added.

The study, conducted by Mercer Human Resources Consulting, ranks 144 urban areas on living costs for foreign employees. Used to determine pay for expatriate workers, the survey looks at 250 criteria, including cost of food, utilities, transportation and entertainment.

(HK Edition 06/15/2004 page2)